The Deposit Money Banks (DMBs) borrowing from Central Bank of Nigeria (CBN) dropped by 8.5 per cent to N614 billion last week from N671 billion reported in prior week.
Commercial banks use the CBN’s Standing Lending Facility window (SFL) to support their liquidity shortfalls and meet trading obligations on short term basis.
The SFL of the apex bank window revealed that commercial banks borrowing continued to drop towards as nation’s economy steadily recovering from recession.
The apex bank for some time has maintained interest rates on SLF at 16 per cent and the rate remained unchanged in 2017.
For last week alone, the breakdown of amounts borrowed include, N87.89billion, N110.7 billion, N163 billion, N132.65 billion and N119.8billion, respectively.
In the prior week, the breakdown of DMBs’ borrowing from CBN was: N117.6 billion, N116.7 billion, N123.7 billion, N135 billion and N178 billion respectively.
In the first week of this Month, DMBs had borrowed N1.019trillion from the CBN, accumulating to estimated N2.3 trillion in three weeks.
Analysts said that the CBN’s lending to banks had increased in recent times on the back of liquidity issues in the economy.
In November, DMBs borrowed N2.77trillion from the CBN with an average amount of N154billion.
Aftermath of new foreign exchange policy in early 2017, banks were borrowing from CBN to provide Naira equivalent of Dollar purchases. The banks borrowing from CBN dropped over stability in the foreign exchange market as apex bank remained resilient in bridging the gap between the parallel market and official market rates.
In a phone chat with Eyes Of Lagos, the managing director, Enterprise Stockbrokers Plc, Rotimi Fakayejo, explained that “the decline in banks borrowing from CBN was as a a factor of improved economy.
Federal government started releasing funds to states government and that imply more funds injection in the banks. That alone reduces the pressure in the economy.”
Fakayejo said the lending of banks somehow reduced compared to the ratio of deposit. He said the liquidity system might have improved but there is still an imbalance within the system.
