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Thursday, May 26, 2022

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Nigerian banks pay N1.33 bln interest to CBN for N2.18 trln short term borrowing in April

By Oludare Mayowa

 

Nigerian banks borrowed about N2.18 trillion from the Central Bank of Nigeria (CBN’s) Standing Lending Facility (SLF) at 12.5 percent in April to cover their positions as the system ran short of liquidity.

According to the CBN economic report for the month, “the recourse
to standing facility resulted in a net lending of N2,183.64 billion, due to
tight liquidity in the banking system.”

The regulatory bank said that total request for the SLF in April 2021 was N2,302.58 billion, made up of N1,543.52 billion direct SLF and N759.06 billion intra-day lending facility converted to overnight repo.

The report stated that daily request averaged N135.45 billion in the 17 transaction days with total interest earned by the CBN on the lending at N1.33 billion.

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“Total SDF granted, during the review period, was N118.94 billion with daily
average of N7.00 billion in the 17 transaction days. Cost incurred on SDF
in the review month stood at N0.23 billion,” the CBN said.

The report noted that banks suffered liquidity shortage in the month due to provisioning and settlement of foreign exchange and CBN bills purchases, as well as Cash Reserve Requirements (CRR) debits.

However, the repayment of matured securities and monthly budget disbursements to the three tiers of government, especially to states and local governments moderated the liquidity condition in the banking system during the month.

The average open positions of banks declined 43.3 percent to N146.59 billion as against N258.7 billion in the previous month.

 

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