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Business News

CBN says no more interest payment on bank deposits exceeding N2 billion

The Central Bank of Nigeria has directed that banks’ daily deposits placement through the CBN’s Standing Deposit Facility, shall no longer exceed N2 billion. 

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CBN, Key lending rate, CBN to boost creative industry with N22 billion , CBN increases LDR to 65%, sets December deadline, External reserves drop by $3.2 billion in Q3’19 , Banks' loans to Oil and Gas, Power, other sectors drop by N411.8 billion 

As part of its effort to stimulate lending to the real sector of the economy, the Central Bank of Nigeria has directed that banks’ daily deposits placement through the CBN’s Standing Deposit Facility, shall no longer exceed N2 billion. 

According to a circular released on the apex bank’s website and titled Guidelines on accessing the CBN Standing Deposit Facility”, daily deposits by any bank in excess of N2 billion shall not attract interest payments.

According to the circular which was signed by the apex bank’s Director of Financial Markets Department, Angela Sere-Ejembi, the new directive will take effect from today, Thursday, July 11th, 2019.

Below are some of the key highlights from the circular.

  • The remunerable daily placements by banks at the SDF shall not exceed N2 billion.
  • The SDF deposit of N2 billion shall be remunerated at the interest rate prescribed by the Monetary Policy Committee (MPC) from time to time.
  • Any deposit by a bank in excess of N2 billion shall not be remunerated. 

It should be noted that the new guideline (N2 billion) by the apex bank represents a 73% reduction from the previous limit of 7.5 billion introduced way back in 2014. 

[READ THIS: Creditors of failed banks get N11.5 billion from NDIC]

Past Developments: In November 2014, the Central Bank of Nigeria observed that deposit money banks and discount houses preferred to keeping their idle balances in the Standard Deposit Facility with the CBN. Unfortunately, this preference contributed to the restraining of the financial intermediation process. And this was why the CBN opted to review the guidelines for the operation of the standing deposit facility.

The review recommended that daily placements by discount houses and banks at the SDF should not exceed N7.5 billion. This was to be remunerated at the SDF rate at 10% annually. 

What the latest development implies: In recent times, deposit money banks have been reluctant to lend to the key sectors, a trend which the CBN is determined to put an end to. Therefore, the aim of the latest directive is to unlock the credit market, whilst making funds available to the real sector which, currently, is starved of funds. Ultimately, this will encourage lending activities and stabilise/encourage economic growth.

Analysts at Nairametrics also believe that this will help facilitate the CBN’s recent directive for banks to issue credit above 60% to the real sector.

What is Standard Deposit Facility: It is a monetary policy operation used by Central Banks around the world to absorb deposits from deposit money banks, without involving the use of government securities as collateral in return. In other words, it is a collateral-free monetary policy arrangement.

Charles Abuede is a graduate of Economics and Statistics from the University of Benin. He has worked as a business correspondent at Voidant Wireless Service (Pryde TV) and Entrepreneurs.ng. He is currently a Research Analyst at Nairametrics. You can reach him on [email protected] or @CharlesAbuede on LinkedIn and @AbuedeCharles on twitter.

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Corporate Press Releases

Applications across Nigeria, South Africa and Kenya now open for the 2021 Facebook Community Accelerator Program

The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.

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Facebook

Today, Facebook is inviting community leaders from Nigeria, South Africa and Kenya to apply for the 2021 Facebook Community Accelerator Program—a program that offers participants training, mentorship and up to $50,000 USD in funds to invest in an initiative that extends their community’s positive impact.

The aim of the Community Accelerator is to help leaders of Facebook communities to harness the power of their community to turn ideas into action. The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.

Lessons include community identity foundations, leading action-oriented programmes and sustainability. Participants will also receive early access to new Facebook products aimed at helping communities better manage and activate their members.

Plan an initiative

Participants will identify an important initiative that will create a positive impact on the broader world and develop a plan to mobilise their community around their goal. Initiatives will be shared with potential partners, mentors and a panel of judges for the chance to be awarded funding and receive public recognition.

Participants will then spend three months executing their initiatives. They will collaborate with advocates and leaders in the community space and work with the Facebook team to bring their ideas to life.

Says Kiran Yoliswa, Partner Management Lead, Middle East and Africa Community Partnerships at Facebook: “Facebook communities and their leaders are helping to resolve social challenges, sharing knowledge and information, while connecting with others that share their interests or passion for a cause. We’ve seen so many incredible communities from across South Africa, Kenya and Nigeria using our platform to drive change and provide support and encouragement for thousands of people, we’re excited to offer their Facebook Community leaders this program to help amplify their impact even more.”

How to apply

Hotflex

This program is open to communities that have a presence in Facebook Groups with leaders who are 18 years or older. Communities must have existed for over one year and must have a minimum size of 1,000 members. Applications open today, May 4 – 31, 2021.

The Community Accelerator is part of our Facebook Community Leadership Program, a global initiative that invests in people building communities. Learn more and apply here.

You can find out more about the 2020 Community Accelerator cohort and those who received additional funding here.

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Business News

NIN registration: 54 million Nigerians have now enrolled – Buhari

12 million Nigerians were enrolled into the National Identity Database in the past 6 months.

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Buhari approves free business name registration for 250,000 SMEs, IMF, tax, rate, Buhari’s Budget of Sustaining Growth & Job Creation (Full text), Nigeria generates N1.36 trillion from corporate tax, others as oil revenue drops , Nigeria-Algeria highway gets Buhari's approval , Earnings from rich petroleum resources not enough to cater for Nigeria – Buhari , Tax: Buhari appoints Muhammad Nami as FIRS boss, Subsidy economics

President Muhammadu Buhari disclosed that the FG has enrolled 54 million Nigerians into the National Identity Database, citing that 12 million were enrolled in the past 6 months alone and that the final aim of the scheme is to secure Nigeria’s security infrastructure.

President Buhari disclosed this in a statement on Thursday evening.

What the President said about NIN enrollment

“I am pleased with the success we are recording in the enrollment of persons into the National Identification Number (NIN) database. 54 million Nigerians have now enrolled; I am told over 12 million of these within the last six months. Our goal is total coverage.

The National Identification Number (NIN) is the foundational digital ID for the country. It will cover one of the weaknesses in our security structure. We will be able to easily identify all Nigerians, including the crooks in our midst.”

The President added that both legal residents and Nigerians are expected to obtain the NIN as it would be beneficial to government agencies to utilise resources efficiently.

In case you missed it

The Federal Government announced a further extension of the ongoing National Identification Number (NIN) registration and linkage with Subscriber Identity Module (SIM) exercises to a new deadline of June 30, 2021.

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