Banks Borrowing From Cbn Rises 395 To N4.7trn

Banks borrowing from theCentral Bank of Nigeria, CBN, rose sharply by 395.2 percent week-on-week WoW to N4.72 trillion last week from N953.11 billion the previous week.

The CBN has two short term lending windows for banks namely the Standing Lending Facility SLF and Repo lending. The banks resort to these windows to bridge temporal liquidity gaps.

While the CBN lends money to banks through the SLF at interest rate of 500 basis points bpts above the Monetary Policy Rate MPR, it also lends money to banks through Repurchase Repo arrangement, which involves the purchase of banks securities with the agreement to sell back at a specific date and usually for a higher price.

On the other hand, the CBN accepts deposits from banks through its Standing Deposit Facility SDF and pays an interest rate of MPR minus 100 bpts.