There are indications that banks in Nigeria are increasingly relying on the Central Bank of Nigeria, CBN, for liquidity as their borrowings from the apex bank intensifies.
A CBN data obtained by Vanguard shows that within the first half of 2023, H1’23, which ended last weekend, the banks borrowed N10.35 trillion from the CBN’s Standing Lending Facility, SLF, a whopping 140 percent year-on-year (YoY) rise from N4.3 trillion in the corresponding period of 2022, H1’22.
The data shows that the first quarter figure, at N4.95 trillion, had already outstripped the half-year 2022 figure, while the subsequent borrowing further increased the reliance by 5.05 percent to N5.4 trillion in the second quarter, Q2’23.
The data also shows that banks’ deposits in the apex bank Standing Deposit Facility, SDF, deteriorated by 2.0 percent in Q2’23 to N898.25 billion from N1.36 trillion in Q1’23.
However, the combined impact of the two quarters in H1’23 was a 34 percent rise in the banks’ SDF balances with CBN. The rise in banks’ borrowings from the SLF reflects the continuous rise in currency outside banks and currency in circulation (CIC) in the economy.
