The Central Bank of Nigeria (CBN) has introduced a single-tier remuneration structure for its Standing Deposit Facility (SDF), which applies to commercial banks’ large deposits exceeding N3 billion. A Standing Deposit Facility (SDF) is a financial instrument central banks employ to regulate liquidity within the economic system....TAP TO READ THE FULL CONTENT | TAP TO READ THE FULL CONTENT
Banks with excess liquidity can deposit these funds with the central bank using the SDF.
The central bank, in turn, provides interest on these deposits.
In a circular addressed to United Bank for Africa, Zenith, Access, Guaranty Trust Bank and other commercial banks, CBN said the Sanding Deposit Facility (SDF) will now be 26.5%.
This represents a sharp increase from the previous 19%. The policy change was communicated through a circular issued by Omolara O. Duke, Director of the Financial Markets Department.
The circular instructed all authorised financial institutions to acknowledge and implement the updated structure, which supersedes the previous framework, Punch reports.
It reads: “At the 298th meeting of the Monetary Policy Committee (MPC), the committee retained the asymmetric corridor at +500/-100 around the MPR and removed the 2nd tier of the standing deposit facility (SDF) of 19% on deposits above N3 billion. The SDF will now be remunerated on a single-tier basis, which is currently the monetary policy rate (MPR) minus 100 basis points. Consequently, all SDF will be remunerated at the prevailing SDF rate of 26.50%.
This circular supersedes the earlier circular on the asymmetric corridor indicated below:
“Superseded circular: Ref: FMD/DIR/PUB/CIR/001/017, dated August 26, 2024
Subject: Operationalisation of the standing deposit facility (SDF) symmetric corridor. All authorised dealers are required to take note of this new development. This circular takes immediate effect.”
