For the second consecutive month, Nigerians’ banks borrowing from the Central Bank of Nigeria reduced in February, this time by 47%. In January, borrowing from the CBN fell by 46% while deposits rose by 29%. The two consecutive months’ decline in banks’ borrowing from the apex bank follows a continued improvement in the level of liquidity (i.e idle funds) in the interbank money market.
Conversely, the deposits to the apex bank grew to N489.5 billion, increasing over January’s close of N272 billion. Month on month increase in the liquidity of the daily opening position of the market rose from N179.98 billion in January to N306.55.
Banks are able to access monies at the Central Bank through the Standing Lending Facility (SLF) and Repo (Repurchase) Lending. Borrowing through Repo dropped to N666.8 billion in February, compared to N952.79 billion in January. Similarly, SLF borrowing fell to N186.48 billion from N313.43 billion.
This is a sharp change in direction as the CBN lent N1.7 trillion to banks in the quarter that ended in December 2021. The report read in part at the time, “
“The trend at the CBN standing facilities window indicated more activities at the Standing Deposit Facility window, compared to the Standing Lending Facility window, owing to liquidity surfeit in the banking system.
“Following the Monetary Policy Committee meeting of September 2020, applicable rates for the SLF and SDF changed from 14.5 per cent and 7.5 per cent to 12.5 per cent and 4.5 per cent respectively.”