Commercial banks in Nigeria including Zenith , Access and others borrowed a whopping N3.03 trillion from the Central Bank of Nigeria Data from the CBN website says the banks’ borrowings happened within 22 days in September
The borrowings are indicative of tight liquidity in the banking sector and a sign of non-performing loans
Banks’ borrowings from the Central Bank of Nigeria surged in September from N322.97 billion in August to N3.03 trillion, an increase of 835%.
Similarly, the CBN has invested almost N10 trillion in different sectors of the Nigerian economy over the years.
Nigerian banks increase borrowings from CBN in September Credit.
Increased borrowings, a sign of liquidity squeeze According to data from CBN, from early September to Friday, September 22, 2023, total banks’ borrowings from the apex bank stood at N3.028 trillion.
The banks accessed the borrowings through the Lending Facility of the CBN. The Standing Lending Facility (SLF) is a short-term credit to commercial banks to draw from when in need of short-term withdrawals from their customers.
Reports say a net SLF is an indication of liquidity problems in commercial banks due to the central bank’s monetary policy or a symptom that the banks have a lot of non-performing loans.
Banks under pressure due to CBN monetary policies Financial experts believe that the growing SLFs are due to monetary tightening by the apex bank to curtail demand for FX as well as reduce inflation pressure on commercial banks to borrow more money.
In the last two years, CBN has undertaken a monetary policy contraction, relying on its cash reserve requirement and loan-to-deposit ratio to mop up billions from commercial banks weekly.
Data from the Central Bank of Nigeria as of Thursday, September 21, 2023, shows that the currency in circulation hit about N2.7 trillion as of the end of August 2023. In February 2023, the country had a mere N982.1 billion as currency in circulation following the naira redesign policy of the CBN.
Source: Legit.ng