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Central Bank of Nigeria (CBN) has tightened the reins on how its authorised market dealers are accessing to discount window following infractions, according to a new circular issued on its website.
The apex bank referenced its circulars dated August 1, 2012, and August 8, 2016, saying it has observed that authorised dealers’ non-adherence to the provisions.
In the new release, the CBN restates its position on the use of discount window includes the Standing Lending Facility (SLF), the Automated Repo Conversion (AREPO), the Funding for Liquidity Facility (FfLF), and the Tenored Repurchase Transactions (REPO).
It said that all authorized dealers are to note that participants with successful bids at the Open Market Operations (OMO) auctions are to refrain from accessing the discount window on the auction date henceforth.
According to the Bank, failure to comply shall result in the reversal of allotment. Furthermore, the CBN also said it will not permit participants with successful bids at the government securities auctions including the Nigerian Treasury Bills (NTBs), Federal Government of Nigeria (FGN) Bonds and Sukuk to access the discount window on the settlement date.
In addition, dealers’ requests for standing lending facility, funding for liquidity facility and tenored repurchase transactions on the settlement date will not be permitted again, the apex bank stated.
In addition, the CBN indicated that automated repo conversion and conversion of Intraday Liquidity Facility (IDF) to funding for liquidity facility on the settlement date, as well as running REPO shall attract a penal charge of five per cent (5.00%) flat on the allotment value.
In its new circular, the CBN further said participants with successful foreign exchange (FX) bids and transactions are not to access the discount window on both auction and transaction settlement dates.
The apex bank warned authorised dealers that failure to comply shall result in the cancellation of their bids or transactions, saying the circular takes immediate effect.
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