FG Securities: CBN tightens noose on banks access to lending facility

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The Central Bank of Nigeria (CBN) said it will no longer allow banks access its Standing Lending Facility for the payment of government securities which they bought.

The apex bank regularly auctions Treasury Bills, Open Market Operations (OMO) to mop up liquidity in the system as well as Federal Government Bonds which it sells to raise funds for the government.

It however noted that banks, through their authorized dealers, have been accessing the Standing Lending Facility, which is a means of lending funds to the banks who are short on liquidity, to pay for government securities which they buy from the apex bank.

In a circular issued to all authorized dealers and signed by the Director, Financial Markets Department, Dr Alvan Ikoku, the apex bank said in view of the observed abuse of access to the SLF by authorized dealers, “it has become imperative that some measures be taken to redress the trend and redefine the mode of operation by authorized dealers at the window.

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