See how much Nigerian banks borrowed from CBN in 3 weeks

• Nigerian banks in need of cash have secured over N3 trillion loan from the Central Bank of Nigeria
• Data from the CBN website showed that the banks' borrowings happened in three weeks through the Standing Facilities Window Operations
• The borrowings show reduced liquidity in the banking sector and a sign of non-performing loans

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

Deposit money banks and merchant banks borrowed an incredible N3.76 trillion from the central bank in the first three weeks of June 2024.

Nigerian banks borrow from the CBN Photo credit: CBN
Source: Getty Images

The banks accessed the borrowings through the CBN Lending Facility.

The Standing Lending Facility (SLF) is a short-term credit from which commercial banks can draw when they need short-term withdrawals from their customers.

Banks' borrowings from CBN

According to the CBN data, since the start of 2024, Nigerian banks have borrowed at least N57.4 trillion.

This is significantly higher compared to N10.02 trillion in five months of 2023.

Reports say a net SLF indicates liquidity problems in commercial banks due to the central bank's monetary policy or a symptom of the banks having a lot of non-performing loans.

Experts speak on banks borrowings

According to Muda Yusuf, Chief Executive Officer of the Center for Promotion of Private Enterprises (CPPE), the trend reflects the liquidity pressure that certain banks are experiencing.

He mentioned that the facilities are usually temporary.

He said:

“This may not necessarily indicate that the banks are stressed or unstable."

Vice President of Highcap Securities, David Adnori, said:

“The development points to a lack of liquidity on the part of banks. Monetary policy has been tightening and this has led to low liquidity. "It is cheaper for banks to borrow from the CBN. This development is not positive but negative. We cannot continue to tighten because it will reflect economic growth.”

What to know about CBN's monetary policy rate

Legit.ng has reported that the Central Bank of Nigeria (CBN) Monetary Policy Committee has approved a new Monetary Policy Rate (MPR) of 13%.

CBN governor Godwin Emefiele disclosed that six out of eleven committee members voted to increase the rate.

The Monetary Policy Rate is the rate the Central Banks of different countries are using to control the availability of assets that people can use to convert to cash.

Source: Legit.ng