Banks' borrowings from the Central Bank of Nigeria, CBN, Standing Lending Facility, SLF, fell by 97.6 percent month-on-month, MoM, to N380 billion in April from N16.5 trillion in March 2025 indicating improved liquidity in the banking system.
Trend analysis of Financial data released by the CBN showed that banks borrowed N50.46 trillion in the first quarter of 2025 (Q1'25), an increase of 161.5 per cent when compared to N31.25 trillion borrowed in Q1' 24.
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 500 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 MPR minus 100 bpts .
Reflecting the improved liquidity in the system, banks' deposit of idle cash, with the CBN via the SDF rose by 3.08 percent MoM to N16.7 trillion in April from N16.2 trillion in March 2025.
This continues the upward trend in the first quarter, Q1'25, when banks' deposits in the SDF rose by 957 per cent, QoQ to N19.2 trillion from N1.82 trillion in Q1'24.
The strong patronage at the SDF reflects improved liquidity in the interbank money market.
Last year, the CBN shifted to a single-tier remuneration structure for the SDF.
Under the new policy, all SDF deposits are remunerated at the Monetary Policy Rate (MPR) minus 100 basis points and with the current MPR at 27.5 per cent, this resulted in an SDF rate of 26.5 per cent.
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