Banks’ borrowing from CBN increases by 52% in December

Banks’ borrowing from CBN increases by 52% in December

Liquidity challenges in the economy made the amount of money that commercial banks borrowed from the Central Bank of Nigeria to increase by 52 per cent in the first three weeks of December, data obtained from the CBN website showed on Monday.

The CBN Standing Lending Facility window data revealed that the Deposit Money Banks in the country borrowed N2 . 305 tn from the regulator to cover their cash shortfall positions between December 1 and 22 , 2017.

This represents a 52 per cent increase over the N1 . 515 tn the nation’ s lenders borrowed from the apex bank to cover their positions between November 1 and 22 , 2017.

Commercial banks use the CBN ’ s SLF to support their liquidity shortfalls and meet trading obligations on short- term basis.

The DMBs borrowed N1 . 019 the, N671 bn and N614 bn through the CBN ’ s SLF window during the first , second and third week of December respectively , the central bank data showed.

While the N614 bn borrowed last week was eight per cent lower than the N671 bn loan obtained the penultimate week , the latter was 34 per cent lower than the N 1 . 019 tn the banks borrowed from the CBN three weeks ago.

The CBN SLF data showed that banks borrowed N231 . 92 bn , N217 . 08 bn , N228 . 26 bn , N178 . 28 bn, and N 164 bn, respectively from the central bank between December 4 and 8, 2017.

Between December 11 and 15, the amounts borrowed were N178 . 02 bn , N135 . 3 bn , N123 .77 bn, N116 . 73 bn and N117.64 bn, respectively.

Between December 18 and 22 , the banks borrowed N119 . 836 bn , N132 . 651 bn , N163 . 135 bn , N110739 bn , and N87 . 892 bn , respectively.

During the last week of October and November , the CBN data showed that the banks ’ borrowing from the apex bank rose significantly.

Some analysts attributed the trend to liquidity squeeze and banks ’ demand for funds to participate in the special foreign exchange auctions conducted by the regulator.

In November , the commercial banks borrowed N2 . 77 tn with an average amount of N154 bn.

The highest and lowest amounts the lenders borrowed from the central bank last month were N 260 bn and N 108 bn , respectively.

Economic and financial experts said that the CBN ’ s lending to banks had increased in recent times on the back of liquidity issues in the economy.

Banks with liquidity challenges are often seen more on the CBN SLF window than others.

For example , Skye Bank Plc was said to be more frequent on the CBN SLF window months before the CBN sacked its board and appointed a new one.

The apex bank , which is described as a lender of last resort , has been accused of lending more to the Federal Government in recent months.

A member of the CBN Monetary Policy Committee , Dr . Doyin Salami , had recently accused the central bank of acting like a “ piggy bank ” with its funding of the government.

Salami said he was struggling to understand the apex bank ’s economic rationale for such action.

Monetary data showed a sharp rise in the CBN ’s financing of the government deficit this year, Salami said after the MPC meeting some months ago.

He stated that the CBN ’ s claims on the government had risen 20 - fold to N814 bn from the end of 2016 , while its purchases of government treasury bills increased by 30 per cent to N454 bn.

“ It is clear that the CBN has provided piggy -bank services to the Federal government . While I still wonder what the underlying economics is , I sincerely hope it works , ” Salami added.

The Federal Government is struggling to raise enough revenue amid economic challenges.