By Modupe Gbadeyanka
The sum of N350 million was earned by Deposit Money Banks (DMBs) in the country as interest in the month of July 2019 from the Standing Deposit Facility (SDF) of the Central Bank of Nigeria (CBN).
This amount was generated from the surplus cash kept with the banking sector watchdog by the financial institutions so as to earn interest of 8.50 percent.
According to data sourced from the Economic Report for July 2019 released by the apex bank, the sum of N1.166 trillion, including Intra-day Lending Facility (ILF) converted into repo was the total SDF for the month under review.
However, the sum of N1.373 trillion was borrowed by the banks from the CBN in July 2019 through the Standing Lending Facility (SLF) and this fetched the apex bank an interest of N994.8 billion at 15.50 percent.
“The trend at the CBN standing facilities window showed more patronage at the Standing Lending Facility (SLF) window. Applicable rates for the SLF and Standing Deposit Facility (SDF) remained at 15.50 percent and 8.50 percent, respectively.
“The total SLF granted during the review period was N1,372.95 billion (inclusive of Intra-day Lending Facility (ILF) converted to overnight repo). Daily average was N68.65 billion in the 20 transaction days in July 2019. Total interest earned was N994.80 billion.
“The total SDF granted during the review period was N1,165.82 billion with a daily average of N1.30 billion in the 19 transaction days. Daily request ranged from N9.00 billion to N154.30 billion. Cost incurred on SDF in the month stood at N0.35 billion,” the report by the CBN said.
Business Post reports that the SLF is a window created by the central bank to allow DMBs borrow funds for short-term cash needs, while the SDF makes it possible for financial institutions to deposit their excess cash with the CBN for interest generation.
Recall that recently, the central bank released a circular that it would no longer pay interest on cash deposited from commercial banks in excess of N2 billion. This was done to discourage the lenders from leaving money that should be used to propel the economy idle.
The apex bank then further directed the lenders to ensure that from September 30, 2019, they must give out at least 60 percent of their customer deposits as loan to customers or face sanctions.
This directive has made banks to start coming up with different loan offers to their customers so as to meet up with the 60 percent loan-to-deposit ratio (LDR) and avoid punishment.
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