By Jemimah Wellington, JKNewsMedia Reporter
BORROWINGS BY Nigerian banks from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) plunged 97.6 percent month-on-month in April 2025, dropping to N380 billion from a staggering N16.5 trillion in March.
The steep fall signals a significant improvement in banking system liquidity, according to newly released financial data from the apex bank.
The SLF, which allows commercial banks to access overnight loans at 500 basis points above the Monetary Policy Rate (MPR), is one of two short-term funding windows provided by the CBN—the other being Repurchase (Repo) lending.
The drastic reduction in banks’ reliance on the SLF last month suggests institutions were better able to meet short-term funding needs independently.
Yet the first quarter of 2025 tells a different story. From January to March, banks borrowed a total of N50.46 trillion through the CBN’s facilities—a 161.5 percent increase compared to N31.25 trillion in Q1 2024.
That surge reflected a period of tightened liquidity, likely driven by macroeconomic adjustments and ongoing monetary policy recalibrations.
The CBN’s Repo arrangement, which involves the central bank purchasing securities from banks with an agreement to resell them at a later date for a higher price, remains another mechanism for short-term funding. However, April’s SLF figures suggest demand for such facilities diminished markedly.
On the deposit side, liquidity improvement was underscored by a 3.08 percent rise in banks’ use of the CBN’s Standing Deposit Facility (SDF), climbing to N16.7 trillion in April from N16.2 trillion in March.
The SDF allows banks to park excess funds with the CBN, earning interest at MPR minus 100 basis points.
This builds on a robust trend recorded in the first quarter of 2025 when SDF deposits surged by 957 percent quarter-on-quarter—up to N19.2 trillion from just N1.82 trillion in Q1 2024.
The rise in idle cash deposits suggests that many banks now enjoy stronger cash positions, reducing the urgency to tap into emergency lending windows.
The CBN notes that its earlier decision to adopt a single-tier remuneration model for the SDF may have contributed to this shift, providing a consistent framework that encourages more stable deposit behaviour among banks.
Market analysts also interpret the evolving trends as a positive signal, noting that with reduced reliance on the CBN funding and increased deposits, the financial sector appears to be regaining footing.
They stated that the shifting dynamics also hint at the potential for lower interbank rates and expanded lending capacity to consumers and businesses.
