Godwin Emefiele, CBN governor

The Central Bank of Nigeria (CBN), has instructed Deposit Money Banks not to pay interest on cash deposits beyond N2billion.

The apex bank which gave the instruction in a circular titled: ‘Guidelines on accessing the CBN Standing Deposit Facility,’ signed by the Director, Financial Markets Department, Angela Sere-Ejembi, on Wednesday, said remunerable daily placements by banks at the Standing Deposit Facility will not exceed N2billion.

“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 circular obtained by Economic Confidential read.

“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 said.

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