The Central Bank of Nigeria (CBN) says it has injected a total of N75.49 billion into the Nigerian economy.
The injection was done last week through a repayment made to investors on 90, 14 and 182-day tenor bills and sale of treasury bills on the 84-day and 213-day tenor bills.
The transactions, the News Agency of Nigeria reports, quoting the CBN’s weekly report, were conducted at the Open Market Operation (OMO) and the Primary Market Auction (PMA) segments of the government securities market.
At the two segments, according to the report, activities were low because the CBN did not sell any bill as they were not available except the repayment made to investors.
For the 84-day tenor bills, CBN placed on offer N10 billion worth, but it was oversubscribed by investors who demanded for N12 billion worth of it.
The bid rates on the bills, according to the report, hovered between 3.90 and 7.25 per cent but the issue rate was between 3.90 and 3.64 per cent.
The 84-day tenor bills are expected to have a true yield rate of 3.9780 per cent on the maturity date on September 17, 2009
The 213-day tenor bills worth N20 billion were also oversubscribed because investors demanded for N39 billion worth of it.
The range of bids at the auction was between 4.79 and 7.25 per cent but the issue rate stood between at 4.79 and 5.74 per cent.
The bills, which are to mature on February 11 2010, had a true yield rates of 6.0444, per cent.
The monetary policy rate, the report said, remained at 8 per cent.
Meanwhile the CBN also said it has placed a ceiling on banks lending to the public sector in its bid to shore up credits for the real sector of the economy.
The new rules annulled the 2002 order which had moderated lending to the public sector.
Under the old regulation, banks were allowed to make 50 per cent provisions for performing facilities and 100 per cent provision for non-performing loans.
The new directive was contained in a circular to banks by CBN’s Acting Director of Banking Supervision, Mr. D. N. Eke.
The circular read: “A maximum limit of 10 per cent of the total credit portfolio should be placed on public sector credits, both on-and-off balance sheet.”
According to the CBN, where the existing credit limit to the public sector exceeded the prescribed maximum limit of 10 per cent, it should be brought down to the maximum limit of 10 per cent by Dec. 31, 2009.
It added that he details contained in the old circular of April 15, 2002 had been revised.
“Banks are now to apply the normal provisions of the prudential guidelines to all public sector credits,” the apex bank said.
It said also that “banks are, however, reminded of the history of non-performing public sector credits, and are therefore strongly advised to exercise caution and set a more conservative threshold to avoid the mistakes of the past.”
CBN warned banks that it would be constrained to reintroduce measures to curb public sector loans if banks failed to put in place appropriate measures to avoid excessive exposure to the sector
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