The Central Bank of Nigeria (CBN) has lifted restrictions on banks from accessing its standing lending facility (SLF), also known as the discount window, if they participated in the foreign exchange market or purchased government securities at primary auctions.

The apex bank disclosed this in a circular addressed to deposit money banks (DMBs), authorised dealers and the public. It was signed by the Acting Director, Financial Markets Department, Okey Umeano.

Under the revised rules, banks that access the discount window will no longer lose eligibility simply because they trade on the Nigerian Foreign Exchange Market (NFEM) or bid at primary open market operations (OMO) auctions. The changes took immediate effect.

The CBN said the review followed developments in the foreign exchange, money and fixed-income markets and was aimed at giving banks greater flexibility in managing liquidity.

Yet, banks cannot access the discount window and participate in OMO auctions on the same day.

The apex bank also expanded participation in OMO auctions to individuals, corporates and non-bank financial institutions.

However, they must participate through DMBs, which will submit bids and settle transactions on their behalf.

The CBN retained control over the size, tenor and frequency of OMO sales as well as the single-bid auction format.

It also reintroduced tenored repurchase (repo) operations, which had been suspended.

Under the revised framework, banks can access repo funding for between four and 90 days, providing the CBN with another instrument to inject or withdraw liquidity from the banking system.

The latest changes build on reforms to the CBN’s market operations since 2022, when it issued the initial discount window guidelines and 2019, when the OMO framework was introduced.

The apex bank directed all banks and other market participants to comply with the new rules immediately.