By Kayode Tokede
The Central Bank of Nigeria has disclosed that Deposit Money Banks (DMBs) and merchant bank through the Standing Deposit Facility (SDF) average deposit dropped by N21.87billion in 2020.
The economy half-year activity report of the apex bank stated that “the request at the SDF window declined to an average daily amount of N21.87 billion for the 123 transaction days in 2020, from N67.64 billion for the 121 transaction days in 2019.
“Similarly, the average daily interest payments on the deposits decreased to N8.21 million in the review period, compared with N23.22 million in the corresponding period of 2019.
“The reduced volume of transactions in the year was attributable to the reduction in the placement limits on remunerable deposits from N7.50 billion to N2.00 billion.”
On borrowing using the Standing Lending Facility (SLF), the report stated that, “In the period under review, the average daily request for SLF was N34.14 billion in 95 days, out of which ILF conversion was N12.89 billion or 37.76 per cent of total request.
“The average daily interest earned was N0.21 billion. In the corresponding period of 2019, the average daily request for SLF was N98.65 billion in 121 days, out of which ILF conversion was N35.50 billion or 35.98 per cent, while average daily interest earned was N0.67 billion. The higher patronage at the window in 2019 reflected tighter liquidity conditions.”
The report stated that merchant and DMBs patronized the Bank’s discount window for the standing facilities to square-up their positions by borrowing from the SLF or depositing excess funds at the SDF window at the end of each business day.
According to the report, “The trend at the window showed a lower recourse to the SLF in the first half of 2020, than the corresponding period of 2019.
“Meanwhile, the threshold for daily deposits per institution at the SDF remained at N2 billion, in line with the policy thrust to encourage real sector lending.
“The applicable rates, for the SLF and SDF, was 15.50 and 8.50 per cent, from January to May 27, 2020, respectively; and 14.50 and 7.50 percent from May 28 to end-June 2020.
“In the first half of 2019, the applicable rates for SLF and SDF, was 16.00 and 9.00 per cent, from January to March 25, 2019, respectively; and 15.50 and 8.50 per cent from March 26 to end-June 2019. The rates are anchored to the MPR.”
According to the report, “At the inter-bank funds market, the total monthly average value of transactions increased by 20.59 per cent to N1,453.24 billion in the first half of 2020 from N1,205.09 billion in the first half of 2019.
“OBB transactions accounted for 94.81 per cent of the total value of inter-bank deals, while transactions at the unsecured inter-bank segment accounted for the balance of 5.19 per cent, compared with 93.74 and 6.26 per cent, respectively in 2019.
“A breakdown of the transactions at the inter-bank market showed a significant increase in call placements to N53.20 billion, from N36.92 billion in the first half of 2019.
“At the OBB segment, transactions increased by 21.97 per cent to N1,377.80 billion, in the review period from N1,129.61 billion in the corresponding period in 2019 (Table 2.5).
“The improved confidence among the DMBs contributed to the increase in transactions at both segments.”