Banks borrowing from the Central Bank of Nigeria, CBN, Standing Lending Facility, SLF, fell by 76.4 percent month-on-month, MoM, to N4.04 trillion in August from N17.12 trillion in July.

Details of figures contained in the CBN Financial Data, however, showed that banks’ deposits in the CBN Standing Deposit Facility, SDF, grew by 270.7 percent MoM to N8.12 trillion from N2.19 trillion in July.

These developments indicate that banks are having idle funds in their systems and businesses are not accessing such funds due to the increase in borrowing rates as a result of the recent raise in the Monetary Policy Rate, MPR.

This is coming on the back of CBN’s recent increment in the rates for the SDF as part of its ongoing efforts to discourage banks from holding excess liquidity at the CBN and to promote increased lending activities.

The decision was detailed in a circular  following the 296th Monetary Policy Committee (MPC) meeting, where the apex bank revised the Asymmetric Corridor around the Monetary Policy Rate (MPR) from +100/-300 basis points (bps) to +500/-100 bps in a bid to discourage banks from holding excess liquidity.

The CBN raised the  SLF rate, which banks use to borrow short-term funds to 31.75 percent .

The SDF rate for commercial and merchant banks’  deposits up to N3 billion at the CBN, was increased to 25.75 percent   and 19 percent for deposits above N3 billion.