Banks cut borrowing from CBN by 44% to N12.2trn

Banks’ borrowings from the Central Bank of Nigeria, CBN, fell month-on-month, MoM, by 44 percent to N12.16 trillion in April from N21.7 trillion in March.

Analysis of latest data from the CBN shows that the 44% drop represents the first MoM decline in banks borrowing from since January when it increased by 268.7 percent to N3.6 trillion from N976.29 billion in December 2023.

However, further analysis showed that banks’ deposits in the CBN SDF grew MoM by 118.4 percent to N428.97 billion in April from N196.37 billion in March 2024.

Banks make use of the SLF to access liquidity to run their day-to-day business operations while the Standing Deposit Facility window (SDF) on the other hand, is an overnight deposit facility that allows banks to lodge excess liquidity (money) with the CBN and earn interest.

The decline in banks’ borrowing from SLF may reflect an increase in banking system liquidity and also the decision of the apex bank last year to remove the limit on the remunerable daily placements by banks at the SDF.

According to the CBN governor, Mr. Olayemi Cardoso the CBN removed the cap on the remunerable SDF to increase activity in the SDF window and manage liquidity.