The Central Bank of Nigeria (CBN) has introduced new rules governing how commercial banks access its Standing Lending Facility (SLF), giving banks greater flexibility to participate in foreign exchange and government securities markets while accessing short-term liquidity from the apex bank. The new framework affects major lenders including Access Bank, UBA, Zenith Bank and other eligible financial institutions.
CBN Removes Key Restrictions
Under the revised rules, the CBN has removed restrictions that previously prevented banks from accessing its Standing Lending Facility, also known as the Discount Window, after participating in transactions in the Nigerian Foreign Exchange Market (NFEM). The apex bank also lifted restrictions linked to banks participating in primary auctions of government securities.
This means eligible banks can now participate in the FX market and purchase government securities at primary auctions without automatically losing access to the CBN's liquidity facility. The changes are contained in a circular signed by Okey Umeano, acting director of the CBN's Financial Markets Department.
What the New Rule Means for Banks
The Discount Window provides short-term funding to eligible financial institutions experiencing temporary liquidity pressures. By removing the previous restrictions, the CBN is giving banks more room to manage their liquidity while actively participating across the foreign exchange, money and fixed-income markets.
The move could also make it easier for banks to respond to short-term funding needs without having to choose between accessing central bank liquidity and participating in other important financial market transactions. However, not all restrictions have been removed.
OMO Restriction Remains
The CBN retained its existing restriction concerning Open Market Operations (OMO). Under the rule, institutions accessing the Discount Window cannot participate in OMO auctions on the same day. The restriction remains part of the framework governing the interaction between the CBN's liquidity facilities and monetary policy operations.
Why the CBN Changed the Rules
According to Umeano, the review followed the apex bank's assessment of developments and market practices across Nigeria's foreign exchange, money and fixed-income markets. He said the CBN had reviewed the framework covering access to the Standing Lending Facility, Tenored Repo Operations and participation in Open Market Operations.
The latest changes are aimed at improving money market functioning and strengthening the transmission of monetary policy. For banks, the revised framework provides greater flexibility in managing liquidity while participating in key segments of Nigeria's financial markets.
Legit.ng earlier reported that the CBN has published updated lending rates of commercial and merchant banks, giving borrowers a clearer picture of what credit currently costs in Nigeria's banking sector. The data published on July 3 is part of its broader transparency and consumer protection framework, enabling households, small businesses, and corporate borrowers to compare the cost of credit before approaching any lender. Two categories of rates are involved: prime lending rates, which are reserved for customers with strong credit standings, and maximum lending rates, which apply to borrowers carrying higher perceived risk.
