CBN says banks will no longer get interests for deposits above N2bn

The Central Bank of Nigeria says banks will no longer get interests on deposits above N2 billion.

In a circular released by the financial markets department, the apex bank said the monetary policy committee will determine the interest for standing deposit facility of N2 billion.

“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 signed by Angela Sere-Ejembi, director of the financial markets department, 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.”

Before now, the SDF was used by banks to store excess cash without having to get government security objects in return.

By November 2014, the CBN said the maximum that could be deposited through the facility was N7.5 billion with banks getting remuneration for their deposits, although banks could deposit excess without being remunerated.

This move leaves banks with excess liquidity, which analysts interpret as a move to encourage lending to the real sector.

The apex bank recently asked banks to increase their loan to deposit ratio to 60% by September.