The Central Bank of Nigeria (CBN) saw a 44% decrease in bank borrowings month over month (MoM) in April, from N21.7 trillion in March to N12.16 trillion.
According to a review of the most recent CBN data, the 44% decrease in bank borrowing marks the first month-over-month reduction since January, when it climbed by 268.7% to N3.6 trillion from N976.29 billion in December 2023.
Subsequent investigation, however, revealed that bank deposits in the CBN SDF increased MoM by 118.4% from N196.37 billion in March 2024 to N428.97 billion in April.
While the Standing Deposit Facility window (SDF) is an overnight deposit facility that enables banks to deposit surplus liquidity (money) with the CBN and earn interest, banks use the SLF to acquire liquidity to execute their daily business operations.
The decrease in bank borrowing from SLF may be due to increased liquidity in the banking sector as well as the apex bank’s decision to eliminate the cap on banks’ daily remunerable placements at the SDF last year.
The CBN eliminated the cap on the remunerable SDF, according to Mr. Olayemi Cardoso, governor of the CBN, in order to boost activity in the SDF window and control liquidity.