CEM REPORT, FINANCE | Deposit Money Banks (DMB) has increased their borrowings from the Central Bank of Nigeria (CBN) up to N981.86 billion between January and February of 2023.
The borrowed sum is an increase by 96.4 per cent Year-on-Year (YoY) when compared to N499.96 billion in the corresponding period of 2022.
According to the financial data released by the CBN, Month-on-Month (MoM), DMBs and merchant banks in January 2023 borrowed N528.16 billion from CBN as against N313.35 billion in January 2022 and in February 2023, it increased significantly by 143.3 per cent to N453.7 billion from N186.48 billion in February 2022.
The CBN makes loan available to DMBs through its Standing Lending Facility (SLF), a short-term lending window for DMBs and merchant banks to access liquidity to run their day-to-day business operations.
The CBN lends money to DMBs and merchant banks through the SLF at interest rate of 100 basis points above the Monetary Policy Rate (MPR) that is currently at 17.5 per cent.
Meanwhile, DMBs deposit with the apex bank increased in the period amidst aggressive liquidity mop-up between January and February 2023 by the apex bank.
According to THISDAY deposit with CBN stood at N1.25 trillion an increase from N785.87 billion in corresponding period of 2022.
Also, the CBN’s Cash Reserve Ratio (CRR) debits has increased significantly this year when compared to last year resulting from scarcity of local currency that obstructed physical cash deposit.