CBN Bars Payment Of Interest On Bank Deposits Above N2bn

The Central Bank of Nigeria has said the remunerable daily placements by banks at the Standing Deposit Facility will not exceed N2bn.

It stated this in a circular, titled ‘Guidelines on accessing the CBN Standing Deposit Facility’,which was signed by the Director, Financial Markets Department, Angela Sere-Ejembi, and sent to all banks on Wednesday.

The bank said, “With reference to the circular to all banks and discount houses, Re: Guidelines on accessing the CBN Standing Deposit Facility, Ref: FMD/DIR/GEN/CIR/05/020 and dated November 6, 2014, after further review, the remunerable daily placements by banks at the SDF shall not exceed N2bn.

“The SDF deposit of N2bn shall be remunerated at the interest rate prescribed by the Monetary Policy Committee from time to time.

“Any deposit by a bank in excess of N2bn shall not be remunerated.

“The provisions of this circular took effect on July 11, 2019.”

In the November 6, 2014 circular, the CBN observed that banks and discount houses had preference for keeping their idle balances at the CBN in the SDF, thereby constraining the process of financial intermediation.

In order to encourage the banks to increase lending to the productive sector of the economy, the guidelines for the operations of the SDF were reviewed.

The review stated that the remunerated daily placements by banks and discount houses at the SDF should not exceed N7.5bn, which should be remunerated at the SDF rate at 10 per cent per annum.

Any deposit by a bank or discount house in excess of N7.5bn must not be remunerated, it added.