The Central Bank of Nigeria (CBN) has said that daily patronage of the Standing Deposit Facility (SDF) by commercial and merchant banks has dropped to N48.32 billion.
The apex bank’s industry report released at the weekend, showed that SDF decreased to an average daily amount of N48.32 billion in 251 transaction days , from N84.27 billion in 246 transaction days in the last one year.
Also, the average daily request for Standing Lending Facility (SLF) was N81.06 billion in 238 transaction days, of which Intraday Liquidity Facility (ILF) conversion averaged N30.76 billion or 37.94 per cent of average daily requests.
The CBN uses SDF and SLF to market industry liquidity and ensure that funds are accessed by banks in dire need of liquidity.
The SLF is an overnight CBN credit available on banking days between 2 pm and 3.30 pm, with settlement done on same day value. Funds were sourced mainly from time, savings and foreign currency deposits, as well as accretion to unclassified assets.
The funds were used, largely, to extend credit to the private sector and payment of claims on demand deposit. The rates for Standing Deposit Facilities (SDF) and SLF remained at nine and 16 per cent, respectively.
The reduction in volume of transactions for the year was due to the change in remunerable SDF from N7.50 billion to N2.00 billion per day per participant.
The report showed that average daily interest charged was N55.13 million. The previous average daily request for SLF was N48.44 billion in 234 transaction days, of which ILF conversion was N30.43 billion or 62.82 per cent, while average daily interest income stood at N35.81 million . The higher recourse to the lending window was traceable market participants trying to access the SLF to meet their shortfalls and comply with CBN’s monetary and prudential requirements.
During the review period, DMBs and merchant banks (MBs) had access to standing facilities to square-up their positions by borrowing at the Standing Lending Facility (SLF) or depositing excess funds at the Standing Deposit
Facility (SDF) at the end of each business day.
The trend showed more frequent recourse to the SLF, despite increased net system liquidity.
The CBN also reduced remunerable threshold for daily deposits per institution at the SDF reduced to N2.00 billion from N7.50 billion.
It said the reduction was to curtail unbridled requests by market participants and encourage inter-bank transactions and lending to the real economy. Applicable rates for the SLF and SDF were anchored to the downward review of the MPR, from 14.50 to 13.50 per cent.
Analysis of the banking sector assets showed that total specified liquid assets of banks stood at N14.2 trillion at last October, representing 59.3 per cent of their total current liabilities.
At that level, the liquidity ratio was 0.9 percentage point lower than the level at the end of the preceding month, and was 29.30 percentage points above the stipulated minimum liquidity ratio of 30 per cent.
The loan-to-deposit ratio, at 61.9 per cent, was 0.3 percentage point below the level at the end of the preceding month and was lower than the maximum ratio of 80.0 per cent by 18.10 percentage points.
Also, at N858.92 billion, the estimated federally-collected revenue (gross) in November 2019 fell below both the monthly budget estimate of N1,246.07 billion and the preceding month’s receipt of N894.09 billion by 31.1 per cent and 3.9 per cent, respectively. The decline, relative to the monthly budget estimate, was attributed to shortfall in both oil and non-oil revenues.
