Nigerian Banks borrow N595.34bn from CBN in two months

Nigerian Banks borrow N595.34bn from CBN in two months

Banks borrowed N595.34bn from the Central Bank of Nigeria CBN between January and February, the apex bank’s economy report have shown.

The CBN’s monthly economic report showed that while N333.59bn was borrowed through the Standing Lending Facility in January, the amount reduced to N255.75bn in February.

The CBN said increased liquidity in the banking system caused a reduction in the amount borrowed by the lending institutions.

The report said, “Subdued activities in the SLF window and the strong patronage at the Standing Deposit Facility confirm increased liquidity in the banking system. Activities at the standing facility window reflected ease in banking system liquidity during the review period.

“The total SDF increased significantly by 60.79 per cent, to N472.38bn, from N293.79bn in January 2022. Conversely, transactions at the SLF decreased by 24.69 per cent, to N255.75bn, from N339.59bn in January 2022.”

A former President, Association of National Accountants of Nigeria, Dr Sam Nzekwe, said banks borrow from the CBN as a lender of last resort.

According to him, the banks also keep part of their savings with the CBN.

He said, “The banks have to take from the CBN because it is the bank of the last resort. CBN is also keeping part of their money which they cannot lend.”

Speaking on liquidity in the sector during the period after a Monetary Policy Meeting, the CBN Governor, Godwin Emefiele, had said members noted that the growth rate of broad money supply (M3) increased to 2.12 per cent in February 2022, compared with 1. 74 per cent in January 2022.

This is as a result of an increase in the growth rate of Net Domestic Assets to 5.78 per cent in February 2022 from 2.62 per cent in the previous month.