Banks’ borrowings from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) dropped sharply by 97.6% month-on-month to N380 billion in April 2025, down from N16.5 trillion in March, indicating enhanced liquidity in Nigeria’s banking system. According to CBN financial data, banks borrowed N50.46 trillion through the SLF in the first quarter of 2025 (Q1’25), a 161.5% increase from N31.25 trillion in Q1’24, reflecting heightened liquidity demands earlier in the year.
The CBN provides short-term funding to banks via the SLF at an interest rate 500 basis points above the Monetary Policy Rate (MPR), currently set at 27.5%, translating to 32.5%. Additionally, the CBN offers Repo lending, purchasing banks’ securities with an agreement to resell at a higher price. Conversely, banks deposit excess cash with the CBN through the Standing Deposit Facility (SDF), earning an interest rate of MPR minus 100 basis points, or 26.5% under the current MPR.
Improved liquidity is further evidenced by a 3.08% month-on-month rise in banks’ SDF deposits, reaching N16.7 trillion in April 2025 from N16.2 trillion in March. This follows a remarkable 957% quarter-on-quarter surge in Q1’25 SDF deposits to N19.2 trillion from N1.82 trillion in Q1’24, driven by enhanced interbank money market liquidity. In 2024, the CBN adopted a single-tier SDF remuneration structure, aligning all deposits at MPR minus 100 basis points, which has bolstered banks’ confidence in parking idle funds, contributing to the liquidity uptrend.
Leave a Reply