Regulatory Alerts2009-07-15 | BSD/DIR/GEN/CIR/03/012Guarantee For Inter-Bank Placement And Placements With Banks By Pension Fund Administrators
The Central Bank of Nigeria (CBN) issued a circular on July 13, 2009, to guarantee all inter-bank placements and placements with banks by Pension Fund Administrators maturing on or before March 31, 2010. This decision was made to improve the effectiveness of Monetary Policy. The pricing for these placements should reflect the credit enhancement provided by the guarantee. Banks are subject to single obligor limits and their placements must follow exposure limits set by National Pension Commission. The guarantee is applicable to only local currency denominated transactions. It covers full payment of principal and accrued interest in case of default. This circular was implemented with the aim of reducing lending rates and stimulating economic growth, while discouraging banks from accessing the CBN Discount Window for placement at inter-bank market.