Under the Standing Lending Facility (SLF) and Repo lending, deposit banks’ borrowing from the Central Bank of Nigeria (CBN) increased by 12% year on year (YoY) to N2.02 trillion in September 2022.
The Standing Financing Facility (SLF) and Repo lending are the two short-term lending channels that the CBN offers to banks.
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The CBN also lends money to banks through the Repurchase (Repo) arrangement, which entails the purchase of banks’ securities with the agreement to sell back at a specific date and typically at a higher price, in addition to the SLF at a rate that is 100 basis points (bpts) above the Monetary Policy Rate (MPR).
The CBN, on the other hand, accepts bank deposits through its Standing Deposit Facility (SDF) and pays an interest rate 700 basis points lower than the MPR.
Data from the CBN Financial Statistics for September 2022 showed that banks’ borrowing through Repo arrangement rose in September 2022 by 13 per cent, YoY, to N1.19 trillion from N1.05 trillion in September 2021.
Similarly, banks’ borrowing through the CBN’s SLF rose by 10 per cent, YoY, to N836.48 billion in September 2022 from N756.37 billion in September 2021.
Consequently, banks’ borrowing from the apex bank through the SLF and Repo rose by 63 per cent YoY to N2.02 trillion in September 2022 from N1.8 trillion in September 2021.
Additional data analysis revealed that bank deposits in the SDF of the CBN increased year over year by 23.5 percent, from N210.6 billion in September 2021 to N260.2 billion in September 2022.
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