Nigerian banks have turned to the CBN in their search for operational funds, borrowing over N8 trillion in the first two weeks of 2025The banks borrowed the money from the apex bank to solve the cash crunch in the financial sector and support loans to sectorsReports have it that the banks were at the time left with little cash because customers had withdrawn so much to spend during the festive season
Henzodaily.ng journalist Victor Enengedi has over a decade’s experience covering Energy, MSMEs, Technology and the Stock Market.
New information shows that commercial and merchant banks borrowed N8.2 trillion from the Central Bank of Nigeria (CBN) in the first 17 days of 2025 to deal with a cash shortage.
According to data from the CBN, this was part of efforts to address liquidity issues in the financial sector and support loans to the real sector of the economy.
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Despite the CBN’s efforts to provide banks with adequate cash, shortages persisted at ATMs and over-the-counter services.
Photo credit – CBN, Doctall Living, CNBC
Source: UGC
The borrowing amount was much lower than the N8.2 trillion borrowed during the same period in 2024.
This became necessary because banks received fewer cash deposits from customers, likely due to heavy spending during the festive season, which led to a shortage of funds in banks.
Despite the CBN’s efforts to provide banks with adequate cash, shortages persisted at ATMs and over-the-counter services, leaving many people reliant on point-of-sale (PoS) operators for cash withdrawals.
The ongoing cash scarcity prompted the CBN to warn banks of potential penalties for failing to ensure cash availability at their ATMs. As a result, nine banks were eventually fined N150 million each for violating this directive.
CBN bails out banks
According to CBN data, commercial and merchant banks borrowed about N131.42 trillion in 2024 to meet the growing demand for cash.
This amount was a massive 636.6% increase compared to the N17.84 billion borrowed in 2023.
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During this period, the banks deposited N6.69 trillion with the CBN while working to provide loans to the real sector of the economy.
Banks use the CBN’s Standing Lending Facility (SLF) for short-term loans to manage daily operations and deposit any excess cash with the CBN through the Standing Deposit Facility (SDF).
In March 2024, banks and merchant banks borrowed about N21.74 trillion, while the smallest amount, N2.9 trillion, was borrowed in January 2024.
These institutions borrowed from the CBN at an interest rate of 32.50%, based on the asymmetric corridor of +500/-100 basis points around the Monetary Policy Rate (MPR).
Dr. Omolara Duke, Director of the Financial Markets Department at CBN, explained in a circular that banks could borrow at a 31.75% rate when the MPR was 26.75%.
Banks access the Standing Lending Facility (SLF) through the Scripless Securities Settlement System (S4) between 5:00 pm and 6:30 pm.
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Additionally, authorised dealers can use the Intraday Lending Facility (ILF) without charges if they repay the same day.
Most bank debtors took loans from MFBs in 2024
In related news, Henzodaily.ng reported that 95.66% of bank loans in 2024 originated from Microfinance banks.
A CBN data which captured loan transactions in September 2024 showed that From a total of 6,537 debtors across all credit types, Microfinance banks pooled an impressive 6,253.
This result confirmed the significant influence of microfinance banks on individuals and small businesses.
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Source: Henzodaily.ng