There are indications that banks are relying more on Central Bank of Nigeria, CBN, for liquidity as their borrowing from the apex bank’s Standing Lending Facility, SLF, increased month-on-month (MoM) by 559 percent to N376.64 billion in November from N57.14 billion in October 2023.
Details from the CBN Financial data for November 2023 showed that bank deposits in the apex bank’s Standing Deposit Facility, SDF, also declined MoM by 18 percent to N2.4 trillion in November from N2.94 trillion in October.
The apex bank has two short-term lending windows for banks and merchant banks namely-SLF and Repurchase (Repo) lending.
Meanwhile, banks’ borrowing from the apex bank has been fluctuating this year, but the increase in banks borrowings from the CBN SLF indicates a continuous decline in banking system liquidity.
The decline in banks liquidity can also be traced to low cash deposit by bank customers, which has resulted in cash scarcity in banks.
Recently, CBN attributed the reported cases of cash scarcity in some major cities across the country to the hoarding of bank notes by some persons it didn’t identify.
The Acting Director Corporate Communications, CBN, Mrs. Hakama Sidi Ali in Abuja explained that currency in circulation as of February 2023, was N1 trillion, while that figure had risen to over N3.4 trillion a few days ago.
Following the cash scarcity across the country, the apex bank had suspended charges on cash deposits above the regulatory limits of N500,000 for individuals and N3 million for corporate account holders till April 30th 2024.