As part of the efforts to tackle liquidity challenges in the financial sector and boost lending to the real sector of the Nigerian economy, commercial and merchant banks have borrowed N8.2 trillion from the Central Bank of Nigeria (CBN) in the first 17 days of business activities in January 2025, data provided by the apex bank has revealed.
Within the period under review, banks and merchant banks’ deposits in CBN stood at N6.69 trillion, amid the banks’ efforts to lend to the real sector of the economy.
Commercial banks and merchant banks access lending from the CBN using the Standing Lending Facility (SLF) window.
They also deposit excess liquidity with the apex bank using the Standing Deposit Facility window (SDF).
The CBN provides the SLF, a short-term lending window for banks and merchant banks, to access liquidity to run their day-to-day business operations.
According to THISDAY investigation, banks and merchant banks aggressively borrowed from the apex bank in 2025, to address the liquidity challenges in the financial sector.
The liquidity challenges can also be traced to low cash deposits by bank customers due to the high spending during the festive period, which created cash scarcity in banks.
In the first 17 days of January 2024, commercial and merchant banks borrowed N3.5 trillion from the apex bank, far below the N8.2 trillion they borrowed during the corresponding period in 2025.
The data by CBN showed that in 2024, both commercial and merchant borrowed an estimated N131.42 trillion over increasing demand for cash.
The N131.42 trillion borrowed in 2024 represented about a 636.6 per cent increase over the N17.84 billion banks and merchant banks operating in Nigeria borrowed in 2023.
As gathered by THISDAY, between 2024 and 2022, the CBN lent banks and merchant banks the sum of N160.41 trillion based on the variation of the Monetary Policy Rate (MPR).
The financial data of CBN showed that banks and merchant banks borrowed the highest amount in March 2024 and the lowest amount in January 2024.
Specifically, about N21.74 trillion was borrowed by banks and merchant banks in March 2024, while the lowest amount of N2.9 trillion was borrowed in January 2024.
These financial institutions in 2024 borrowed from the CBN at an interest rate of 32.50 per cent as the asymmetric corridor around the MPR at +500/-100 basis points.
The applicable rates for the SDF and SLF in 2023 increased by 50 basis points to 11.50 and 19.50 per cent, respectively, following the hike in the policy rate by 50 basis points to 18.75 per cent in June 2023.
The interest rate at which these banks and merchant banks borrow from CBN changed in 2024 amid the Monetary Policy Committee hike in MPR.
In 2024, the MPC members increased the interest rate from 18.75 per cent to 27.50 per cent amid its mandate to tackle the inflation rate and the unstable Naira in the foreign exchange market.
The Director of the Financial Markets Department, CBN, Dr Omolara Duke had in a circular stated that the apex bank allowed banks to borrow at a rate of 31.75 per cent when the MPR was at 26.75 per cent.
Banks can access the SLF through the Scripless Securities Settlement System (S4) within the specified operating hours of 5:00 pm to 6:30 pm. Additionally, authorised dealers are permitted to access the Intraday Lending Facility (ILF) at no cost, provided it is repaid on the same day.
Commenting on banks and merchant banks’ borrowing from CBN in 2024, a financial expert and vice president of Highcap Securities, Mr. David Adnori, said, “The development points to lack of liquidity on the part of banks. Monetary policy has been tightening and this has led to low liquidity. It is cheaper for banks to borrow from the CBN. This development is not positive but negative.”
“We cannot continue to tighten because it will reflect economic growth,” he added.
The Chief Executive Officer of the Centre for Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf stated: “This is a reflection of liquidity pressure some of the banks are going through. The facility is typically short-term.
“This may not necessarily indicate that the banks are stressed or unstable. Meanwhile, the recapitalisation of banks is long overdue. The minimum capital requirement of N25 billion is no longer adequate if discounted for inflation.”
However, THISDAY gathered that banks and merchant banks’ deposits to CBN stood at N6.69 trillion in 17 days of 2025.
The increase is coming against the backdrop of CBN’s removal of the cap on the remunerative policy, among others.
An SDF is an overnight deposit facility that allows banks to park excess liquidity (money) to CBN and earn interest.
The CBN governor, Mr. Olayemi Cardoso had disclosed that the apex bank removed the cap on the remunerable SDF to increase activity in the SDF window and manage liquidity.
SDF in 2024 witnessed significant patronage as banks and merchant banks’ deposits reached the highest peak of about N8.12 trillion in August 2024.
However, the CBN has over the years maintained that strong patronage at the SDF confirms healthier liquidity in the banking system. (Thisday)
