Access, GTB, UBA, Other Banks Take Advantage of CBN’s Decision To Remove Deposit Limit on Savings

• The CBN decision to remove the limit on how much banks can deposit has provided another opportunity for banks to make money
• Checks show that Nigerian banks, including Access, GTB, UBA, and other banks, have been making use of the SDF window
• Through the SDF, banks are now able to earn more from their excess cash from customers with them

Legit.ng journalist Dave Ibemere has over a decade of experience covering tech, energy, stocks, investments, and the economy

The Central Bank of Nigeria (CBN)’s decision to remove the N2 billion daily limits placed on the Standing Deposit Facility (SDF) is a blessing for banks.

The SDF is like a savings account for banks at the central bank. Banks can deposit extra money there, and the central bank pays them interest.

It is one of the measures the apex bank uses to control how much money is available in the banking system to influence interest rates.

Banks make use of SDF for more revenue

ThisDay reports that Nigerian banks in the first eight days of 2024 have deposited a whooping N902.66 billion with the Central Bank of Nigeria (CBN) to earn interest.

It was observed that the banks, in a single day, deposited N352.47 billion.

This is a significant jump from the N2 billion daily limit removed recently.

CBN explains the decision to remove limit

Recently, the CBN governor, Mr. Olayemi Cardoso, disclosed that the CBN removed the cap on the remunerable SDF to increase activity in the SDF window and manage liquidity.

This is CBN’s message when it first announced the N2bn limit:

“With reference to the circular to all banks and discount houses, Re: Guidelines on accessing the CBN Standing Deposit Facility, Ref: FMD/DIR/GEN/CIR/05/020 and dated November 6, 2014, after further review, the remunerable daily placements by banks at the SDF shall not exceed N2billion.

“The SDF deposit of N2billion shall be remunerated at the interest rate prescribed by the Monetary Policy Committee from time to time. Any deposit by a bank in excess of N2 billion shall not be remunerated. The provisions of this circular took effect on July 11, 2019.”

Top savings platforms paying higher interest rates than banks in Nigeria

Recall that Legit.ng reported that the Nigerian financial industry landscape is laced with interesting options, most of which give users the ability to choose optimal use.

While some banks in Nigeria are paying higher interest to depositors for saving money with them, others are just there to make profits and post interesting figures at the end of their financial year.

The minimum interest rate approved by a regulatory agency like the Central Bank of Nigeria (CBN) is 1.5 per cent.

Source: Legit.ng