Commercial bank borrowing from CBN falls for second straight month

Commercial bank borrowing from the Central Bank of Nigeria for the second consecutive month fell and now stands at N666 billion

CBN revealed this in its latest financial data published on its website and obtained by Ripples Nigeria.

Banks and merchant banks often access the CBN’s Standing Lending Facility (SLF) window to borrow funds, subject to certain eligibility conditions, to temporarily meet their short-term liquidity obligations. .

The apex bank lends money to banks and merchant banks through the SLF at an interest rate of 100 basis points (bpts) above the monetary policy rate (MPR) of 11, 50%.

The CBN also lends money to banks and merchant banks through a Repurchase Agreement (Repo), which involves the purchase of bank securities with the agreement to resell on a specific date and at a higher price.

According to data from the CBN via Repo, bank borrowing fell by 47%, MoM in February 2022, to 480.35 billion naira from 952.79 billion naira in January.

Similarly, borrowing by banks through the CBN’s SLF fell sharply by 40%, MoM, to N186.48 billion from N313.43 billion in January.

952.8 billion naira in January 2022 compared to 9.5 million naira reported in January 2021.

As a result, banks’ borrowing from the apex bank through the SLF and Repo fell 47%, MoM, to N666.8 billion in February from N1.266 trillion in January.

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The decline in banks’ borrowing from the apex bank for two consecutive months follows a continued improvement in the level of liquidity (idle funds) in the interbank money market.

This is reflected in MoM’s 70% increase in the market’s average daily opening position in terms of liquidity to 306.55 billion naira in January from 179.98 billion naira in January.

The above followed a similar trend in January when the market’s average daily opening position increased by 32%, MoM, to 179.98 billion naira as of 28 January from 135.98 billion naira as of 31 December. 2021.

The impact of this trend was reflected in the second increase in the SDF for the consecutive month, which rose 80% to 489.05 billion naira in February from 271.66 billion naira in January.

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