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  • Business - Companies
  • Updated: May 26, 2022

CBN Lends Cash-Strapped Banks N338.4 Billion In One Month

CBN Lends Cash-Strapped Banks N338.4 Billion In One Month

The Central Bank of Nigeria lent cash-strapped banks a total amount of N338.4 billion in January to bridge their funding gap.

According to CBN’s monthly report for January on ‘Standing facilities window operation’, the banks continued to utilise the Standing Lending Facility and Deposit Lending Facility in the sector.

It stated, “Activities at the standing facility window during the period reflected improved banking system liquidity.

“Total Standing Lending Facility contracted considerably by 52.4 per cent to N338.4billion from N711.54 billion in December 2021, the fallout of the improved banking system liquidity in the period.

“In addition, the activity at the inter-bank call segment contributed to the significant decline in SLF.

“Transactions at the Standing Deposit Facility increased by 7.0 per cent to N246.21 billion from N230.22 billion in the preceding month, further buttressing liquidity conditions in the market.”

Osita Nwanisobo, the Director of Corporate Communications, CBN, did not pick up calls or respond to text messages seeking comments.

Bank officials declined comments on the development.

However, industry expert and the Managing Director, Lancelot Ventures Limited, Adebayo Adeleke, said the public cannot deposit money or withdraw money from the CBN.

“The CBN is the bank of last resort, it is the only one authorised to print naira. The only bank that should not run dry is CBN. They also control the banks by ensuring that the banks maintain some levels of deposits with CBN.

“The CBN technically speaking is a bankers' bank.  All the banks bank with CBN, they deposit money and also bank with the CBN and that is why the CBN is able to control the influx of the naira into the economy, regulate the interest rates, increase Monetary Policy Rate and others”.

“So they set the temple up for the control of money. The CBN is the bankers’ bank, the bank of the last resort and the bank of the Federal Government.”

The Managing Director/Chief Executive Officer, Cowry Asset Management Limited,  Johnson Chukwu, said, “The banks borrow from the CBN to meet their funding gap. The SDR and SLR also move regularly. But remember that the banks also keep money in the Central Bank.”

A former President of the Association of National Accountants of Nigeria, Dr Sam Nzekwe, said, “The banks have to take from the CBN because it is the bank of last resort. CBN is also keeping part of their money which they cannot lend.

“They borrow money from the CBN when they don’t have where to borrow money from and they are short of cash. They borrow from the CBN and pay it back.”

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