Story by Kayode Tokede
Commercial banks have deposit an accumulative N5.29 trillion with Central Bank of Nigeria (CBN) between January and May 17, 2019, Nigerian NewsDirect gathered from the apex bank website.
Commercial banks operating in the country where depositing excess funds at the Standing Deposit Facility (SDF) at the end of each business day.
As gathered by our correspondent, commercial banks have increased their deposit with the apex and reduce their borrowing using the Standing Lending Facility (SLF).
Applicable rates for the SLF and SDF this year remained at 16 per cent and nine per cent, respectively, while the rates were anchored to the Monetary Policy Rate (MPR) that was 14 per cent.
In May so far, commercial banks have deposited N1.24 trillion with CBN and borrowed N496.58 billion.
For April, the SDF reported by CBN was N1.24 trillion and N496.6 billion for SLF while in March it was N1.31 trillion and N2.09 trillion SDF and SLF respectively.
However, these commercial banks in February borrowed an accumulative N3.33 trillion and lend CBN N859.9 billion.
Also, commercial banks in early year, January borrowed a total of N3.2 trillion from CBN and lend N852.8billion to CBN.
The CBN had maintained that commercial banks accessed standing facilities to square-up their positions by borrowing at the SLF or depositing excess funds at the SDF at the end of each business day.
The 2018 financial year report of the CBN had noted that the standing facilities trend at the discount window showed less frequent recourse to the SLF, than in 2017 due to increased net system liquidity.
According to CBN annual activity report, the remunerable threshold for daily deposits per institution at the SDF remained N7.5 billion.
“This was to curtail unbridled requests by market participants and encourage lending to the real economy,” the report said.
The report released last week explained that, “The average daily request for SLF was N48.44 billion in 234 transaction days, out of which ILF conversion averaged N30.43 billion, amounting to 62.82 per cent of average daily requests.
“The average daily interest charged was N35.81 million. In 2017, the average daily request for SLF was N216.34 billion in 246 transaction days, out of which ILF conversion was N130.63 billion or 60.38 per cent, while average daily interest income stood at N159.96 million.
“The reduction in patronage at the window in 2018 reflected the higher levels of injections into the banking system.
“Patronage at the SDF window increased to an average daily amount of
N84.27 billion for the 246 transaction days in 2018, from N41.90 billion for the 230 transaction days in 2017. Similarly, the average daily interest payments on the deposits increased to N30.51 million in the review period, from N14.86 million in 2017.
“The increased volume of transactions in the year was due to higher levels of banking system liquidity,” the 2018 report by CBN explained.