In Q3, Banks’ borrowing from CBN up 107% as liquidity pressures worsen

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BANKS’ borrowing from the Central Bank of Nigeria (CBN) rose by 107 percent to N662 billion in November, 2019.

On the contrary, banks’ deposit placement with the apex bank fell by 18.7 percent to N443.6 billion during the month.

Both figures reflect increasing liquidity pressures on the banks.

The CBN lends to banks through its Standing Lending Facility (SLF) while it accepts deposit placement from banks under its Standing Deposit Facility (SDF). While the apex bank charges 15.5 percent interest rate on loans to banks, it pays 8.5 percent interest on deposits from banks.

According to the CBN’s economic report for November 2019, “The total SLF granted, during the review period, was N662.44 billion (made up of N490.29 billion direct SLF and N172.15 billion Intraday Lending Facilities (ILF) converted to overnight repo).

“The total SDF granted during the review period was N443.63 billion with a daily average of N26.09 billion in the 17 transaction days from November 1- 26, 2019. Daily request ranged from N6.30 billion to N42.75 billion.

Cost incurred on SDF in the month stood at N0.16 billion.”

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