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Banks borrow N595 bln short term from CBN SLF in two months ~Report

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The Central Bank of Nigeria (CBN) disbursed a total of N595.34 billion in credit facilities to commercial lenders between January and February this year, according to the regulator’s monthly economic report.

The regulatory bank’s report showed that banks borrowed N333.59 billion from the Standing Lending Facility (SLF) in January, a total of N255.75 billion was disbursed in February through the same SLF to the lenders.

Commercial lenders in the country resort to borrowing short-term, usually overnight from the regulatory bank to bridge their liquidity shortfalls.

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

Conversely, commercial lenders’ deposits with the regulator swelled by 60.8 per cent in the period under review due to rising liquidity in the banking system, according to the CBN.

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“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.

“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 CBN report stated.

The CBN Governor, Godwin Emefiele, had said 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 was largely attributed to 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.

“On the developments in the money market, the Committee observed the movement in money market rates around the asymmetric corridor, reflecting the prevailing liquidity conditions in the banking system.

“Accordingly, the monthly weighted average Open Buyback and Inter-bank Call rates decreased to 5.81 and 9.30 per cent in February 2022 from 6.00 and 16.00 per cent in January 2022, respectively. The decrease in the rates reflected the liquidity conditions in the banking system,” the Governor said at the last Monetary Policy Committee (MPC).

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