CBN lifts restrictions on banks' access to lending facility

The Central Bank of Nigeria (CBN) has lifted restrictions on banks accessing its Standing Lending Facility (SLF). This change comes from banks participating in the Nigerian Foreign Exchange Market (NFEM) and primary auctions of government securities.

The CBN announced these changes in a circular signed by Okey Umeano, the Acting Director of the Financial Markets Department, on Wednesday.

The review was based on recent developments and market practices in foreign exchange, money, and fixed-income markets. It also looked at the rules for accessing the SLF, Tenored Repo Operations, and taking part in Open Market Operations (OMO).

But, the current rule that prevents institutions from accessing the Discount Window while participating in OMO auctions on the same day will still apply. "Restrictions on access to the Discount Window arising from participation in the Nigerian Foreign Exchange Market (NFEM) are hereby removed," CBN stated.

The CBN also mentioned that it has removed restrictions related to participating in primary auctions of government securities. They announced that the suspension of Tenored Repo Operations is also lifted. This will help banks manage their liquidity better.

"The suspension of Tenored Repo Operations is hereby lifted. Accordingly, the CBN may conduct repo operations across approved tenors ranging from 4 to 90 days to support effective liquidity management, improve money market functioning and enhance monetary policy implementation," said the CBN.

Additionally, the CBN changed its OMO participation rules to allow more investors to join both primary and secondary OMO markets through Deposit Money Banks (DMBs). Eligible investors now include individuals, businesses, and non-bank financial institutions. DMBs will continue to submit bids and settle transactions for their customers.

"OMO participation (primary and secondary markets) shall be open to all eligible investors through Deposit Money Banks (DMBs). Eligible investors include individuals, corporates and non-bank financial institutions. DMBs shall continue to submit bids and settle transactions on behalf of their customers," the CBN explained.

The CBN added that the volume, tenor, and frequency of OMO issuances will still depend on current liquidity conditions and monetary policy goals. OMO auctions will keep using the existing single-bid auction format.

These new rules take effect immediately. The CBN has instructed all banks, authorized dealers, and market participants to follow them closely. "All banks, authorized dealers and market participants are required to ensure strict compliance," the apex bank said.