In a significant shift, banks in Nigeria have slashed their borrowing from the Central Bank of Nigeria (CBN) by a staggering 44% in April, dropping to N12.16 trillion from N21.7 trillion in March.
This sharp decline marks the first month-on-month decrease since January, when borrowing surged by 268.7% to N3.6 trillion from N976.29 billion in December 2023.
However, a deeper dive into the data reveals a contrasting trend, with banks’ deposits in the CBN Standing Deposit Facility (SDF) skyrocketing by 118.4% to N428.97 billion in April, up from N196.37 billion in March 2024.
The CBN’s Standing Lending Facility (SLF) serves as a crucial source of liquidity for banks to manage their daily operations, while the SDF provides an avenue for banks to park excess liquidity overnight and earn interest.
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The decrease in SLF borrowing may signal both an uptick in overall banking system liquidity and the impact of the CBN’s decision last year to eliminate the cap on daily remunerable placements at the SDF.
Olayemi Cardoso, the Governor of the CBN, emphasized that the removal of the remunerable SDF cap was aimed at fostering increased activity in the SDF window and effectively managing liquidity within the banking sector.
