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 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 authorised 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.
“Thus all authorized dealers are henceforth directed to refrain from accessing the discount window of the CBN on j settlement date for government security auctions. The securities referred to here are CBN Bills, Nigerian Treasury Bills and Federal Government Bonds.
“All authorised dealers are hereby required to note and comply accordingly as any violation will result in denial of access to the SLF,” the circular read.
The circular also reminded the dealers that they are not allowed to access the SLF for settlement of foreign exchange transactions.
