Banks’ Borrowing From CBN Falls To N10.9 trn, As Deposit Rises 120%

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By Yahaya Umar

Banks’ borrowing from the Central Bank of Nigeria, CBN, fell by 10.6 per cent, month-on-month ,M-o-M, in May to N10.9 trillion.

The CBN has two short term lending windows for banks namely the Standing Lending Facility ,SLF, and Repo lending.

While the CBN lends money to banks through the SLF at interest rate of 100 basis points (bpts) above the Monetary Policy Rate ,MPR, it also lends money to banks through Repurchase ,Repo, arrangement, which involves the purchase of banks’ securities with the agreement to sell back at   a specific date and   usually for a higher price.

On the other hand, the CBN accepts deposits from banks through its Standing Deposit Facility ,SDF, and pays an interest rate of 300bpts below the MPR.

According to CBN’s financial data, banks’ borrowing through the SLF dropped to N10.9 trillion in May from N12.2 trillion in April.

Banks borrowing from CBN has declined for two consecutive months since January when it rose by 268.7% to N3.6 trillion from N976.29 billion in December 2023.

On the other hand, banks’ deposits with the apex bank through the SDF rose MoM by 120% to N943.08 billion in May from N428.9 billion in April.

These developments were driven by improvement in the amount of idle cash (liquidity) in the interbank money market.   

According to the CBN, average daily opening liquidity in the interbank money market rose by 47% MoM to N321.9 billion in May from N218.6 billion in April.

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