CBN sets new guidelines for banks seeking loans from discount window

The Central Bank of Nigeria (CBN) has put in place new guidelines for banks seeking loans from its discount window on auction days.

The new restrictions are detailed in a circular issued over the weekend and signed by CBN’s Director of Financial Markets Department, Mrs. Angela Sere-Ejembi.

Standing Lending Facility (SLF), Automated Repo Conversion (AREPO), Funding for Liquidity Facility (FfLF), and Tenored Repurchase Transactions are listed in the CBN’s discount window (REPO).

The SLF is an overnight CBN credit available between 2:00 p.m. and 3:30 p.m. on banking days.

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Funds were sourced mainly from time, savings, foreign currency deposits, and accretion to unclassified assets.

But the apex bank has now directed banks to refrain from accessing its discount window on the settlement date for government securities auctions.

It decried non-adherence to the provisions of the previous instructions on the discount window.

The circular read: “Government Securities: Participants with successful bids at the government securities auctions such as Nigerian Treasury Bills (NTBs), Federal Government of Nigeria (FGN) Bonds and Sukuk are not permitted to access the CBN discount window on the settlement date.

The CBN also revealed that requests for SLF, FfLF, and REPO on the settlement date would no longer be approved.

According to the bank, a REPO and conversion of Intraday Liquidity Facility (IDF) to FfLF on the settlement date and running REPO will attract a charge of five percent flat on the allotment value.