The Central Bank of Nigeria (CBN) has raised its Standing Lending Facility (SLF) rate to 31.75% in a bid to enhance stability in the financial sector.
This announcement was made in a circular released on Monday by Omolara Duke, the director of the Financial Market Department, which also lifted the suspension on the SLF.
Additionally, the rate for the Standing Deposit Facility (SDF), which applies to deposits made by banks at the CBN, has been increased to 25.75%.
The new policy is set to take effect immediately.
The decision to adjust the SLF rate was made during the 296th Monetary Policy Committee (MPC) meeting in July 2024, where significant changes to interest rate policies were approved.
As part of these adjustments, the CBN modified the Asymmetric Corridor around the Monetary Policy Rate (MPR) from +100/-300 basis points (bps) to +500/-100 bps. This change aims to discourage banks from maintaining excess liquidity at the central bank and to encourage more lending activities.
In the circular, the CBN stated: “As a result, the suspension of the Standing Lending Facility (SLF) is lifted, and Authorized Dealers should submit their SLF requests through the Scripless Securities Settlement System (S4) between 5:00 PM and 6:30 PM.
“Authorized Dealers are now allowed to access the SLF at 31.75%; they can also utilize the Intraday Lending Facility (ILF) at no cost if repaid on the same day. A 5.00% penalty, as outlined in the S4 business rules, will apply to participants who fail to settle their ILF, which will then be converted to SLF at a rate of 36.75%. Furthermore, collateral execution, involving the rediscounting of pledged instruments at the penal rate by the CBN, is reintroduced as per the approved repo guidelines.”
