Bank borrowing from the Central Bank of Nigeria (CBN) decreased by 10.6 percent month on month (MoM) in May to N10.9 trillion. The CBN offers two short-term lending windows for banks: the Standing Lending Facility (SLF) and repo lending.
While the CBN lends money to banks through the SLF at an interest rate 100 basis points (bpts) higher than the Monetary Policy Rate (MPR), it also lends money to banks through the Repurchase (Repo) arrangement, which involves purchasing bank securities with the agreement to sell back at a later date and usually at a higher price.
On the other hand, it takes bank deposits through its Standing Deposit Facility (SDF) and pays an interest rate that is 300 basis points lower than the MPR. According to CBN financial data, banks’ borrowing through the SLF decreased to N10.9 trillion in May from N12.2 trillion in April.
Bank borrowing from this bank has fallen for two consecutive months after January, when it increased by 268.7 percent to N3.6 trillion from N976.29 billion in December 2023.
Bank deposits with the apex bank via the SDF, on the other hand, increased by 120 percent month on month to N943.08 billion in May, up from N428.9 billion in April. These trends were propelled by an increase in the amount of idle cash (liquidity) in the interbank money market.
CBN
According to report, average daily opening liquidity in the interbank money market increased by 47 percent month on month to N321.9 billion in May from N218.6 billion in April.
