Access, Zenith, UBA, Other Banks Run to CBN, Borrow N24 Trillion as Cash Scarcity Hits
- Commercial banks in Nigeria have increased their lending from the Central Bank of Nigeria (CBN)
- In the last three months, commercial banks in Nigeria have borrowed about N24 trillion from CBN
- Analysts say the development means that commercial banks are battling liquidity challenges
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
In almost three months, commercial banks in Nigeria borrowed N24.13 trillion from the Central Bank of Nigeria (CBN) via the discount window to meet short-term obligations.
Analysts believe the trend shows signs of a liquidity squeeze in the banks.
Source: UGC
According to data from the CBN, towards the end of 2023, activities in the window that allowed the CBN and the commercial banks to access funds to meet short-term obligations rose significantly.
Banks borrow more from CBN
According to the Guardian, commercial banks borrow from the CBN more frequently than deposits with the banking regulator.
Every year, banks borrowed N24.13 trillion, representing 94.4% of the total transactions on the window.
Within the review period, about N1.4 trillion was deposited by the commercial banks with the CBN as excess reserve via the standing lending facility (SLF).
Interests received on deposits with the CBN via the SLF are discounted and would necessarily meet certain conditions.
A breakdown of the data from CBN’s financial updates released on Tuesday, March 19, 2023, shows that the SLF and SDF trends have moved upward last year, with the relationship now being one way.
Banks pay high interest rates on borrowing.
The apex bank’s lending to banks in less than three months of 2024 was about N24.13 trillion. The amount is about 135% of the total value to the operator in 2023 at N17.84 trillion.
In 2023, the gap closed, with SDF accounting for slightly more than 40% of the value of transactions. In 2024, however, there has been an uptick in the percentage of SLF that makes up the discount window, suggesting that banks are borrowing more from the CBN.
Analysts say borrowing from the CBN is costly as the banks pay over 23% interest rate.
They say that with the MPR currently at 22.75%, prime borrowers get commercial credit from commercial banks at a discount.
CBN debits Zenith, UBA, GTB, First Bank, 6 others N1.62trn
Legit.ng reported that For failing to meet the 32.5% Cash Reserve Ratio (CRR) threshold, the Central Bank of Nigeria (CBN) had debited about 10 banks N1.62 trillion in the first six months of 2023.
Zenit Bank, UBA, GTBank, FBN Holdings, FCMB, Fidelity, and Stanbic IBTC Holding are among the banks debited by the apex bank.
CRR is the minimum amount commercial and merchant banks are expected to keep with the CBN from customer deposits.
PAY ATTENTION: Stay Informed and follow us on Google News!
Source: Legit.ng
