Merchants and Commercial Banks’ average daily loan requests from the Central Bank of Nigeria’s Standing Lending Facility (SLF) stand at ₦216.34 billion for 246 days in 2017. SLF is a window for banks in the country to borrow from the CBN.
This is contained in 2017 activity report released by the CBN over the weekend.
Out of this loan request, the Intra-day Liquidity Facility (ILF) conversion was ₦130.63 billion, amounting to 60.38% of the total request while the average daily interest charged was ₦159.96 million.
According to the report, Merchant and Deposit Money Banks (M&DMBs) requested the standing facilities to square-up their positions by borrowing from the CBN’s lending facility or depositing excess funds at the end of each business day.
However, in 2016, the average daily request for SLF was ₦130.47 billion in 207 days, out of which ILF conversion was ₦84.62 billion, while average daily interest income was ₦94.76
The apex bank attributed banks’ rising borrowing from the CBN to tough monetary policy measures, which kept the Monetary Policy Rate (MPR)-benchmark interest rate at 14% throughout the year.
The report also showed that patronage at the Standing Deposit Facility (SDF) window, a platform for banks to place a deposit with the CBN, declined to an average daily amount of ₦41.90 billion for the 230 days in 2017, from ₦76.11 billion for the 246 days in 2016.
Similarly, the average daily interest payments on the deposits decreased to ₦14.86 million
during the period in review, from ₦20.01 million in 2016. The reduction in the volume of the transaction during the year was due to tight monetary operations and the sale of foreign exchange to authorized dealers.
The report also noted the challenge of curtailing inflation, promoting increased capital inflows, and restoring the economy to the path of growth was paramount in the bank’s policy mix.
CBN also noted that it conducted liquidity management through the use of Open Market Operation (OMO) as the main instrument of monetary policy, complemented by discount window activities, CRR, and interventions in the foreign exchange market.