Nigerian Banks Slash CBN Borrowings By 97% As Liquidity Improves.
Nigeria’s financial sector is experiencing a change in their borrowings from the Central Bank of Nigeria (CBN). Its Standing Lending Facility (SLF) plummeted by 97.6% month-on-month to N380 billion in April 2025, down from a staggering N16.5 trillion in March 2025. This sharp decline signals a marked improvement in liquidity within the banking system, according to financial data released by the CBN.
The SLF, one of the CBN’s two short-term lending windows for commercial banks, alongside Repurchase (Repo) lending, allows banks to borrow at an interest rate of 500 basis points above the Monetary Policy Rate (MPR). The dramatic reduction in SLF borrowings in April reflects a bolstered financial environment, reducing banks’ reliance on CBN funds to meet short-term obligations.
Despite the April dip, trend analysis reveals that banks borrowed a total of N50.46 trillion in the first quarter of 2025 (Q1’25), a 161.5% surge compared to N31.25 trillion in Q1’24. This spike underscores the heightened demand for liquidity earlier in the year, driven by economic pressures and monetary policy adjustments.
In contrast to the SLF, the CBN’s Repo lending involves purchasing banks’ securities with an agreement to sell them back at a specified date, typically at a higher price. Meanwhile, the CBN incentivises banks to deposit excess cash through its Standing Deposit Facility (SDF), offering an interest rate of MPR minus 100 basis points. Reflecting the improved liquidity, banks’ deposits via the SDF rose by 3.08% month-on-month to N16.7 trillion in April from N16.2 trillion in March 2025.
Analysts view the decline in SLF borrowings and the uptick in SDF deposits as positive indicators of a stabilising banking sector. “The significant drop in borrowings suggests banks are better positioned to manage their liquidity without leaning heavily on CBN support,” said Dr. Chidi Okoro, a financial analyst based in Lagos. “This could pave the way for more competitive lending rates and increased credit availability for businesses and consumers.”
The CBN’s monetary policies, including its management of the MPR, have played a pivotal role in shaping liquidity trends. The improved liquidity in April aligns with the CBN’s broader efforts to maintain stability in the financial system amidst inflationary pressures and foreign exchange challenges.
As Nigeria’s economy navigates a complex global landscape, the CBN’s data will continue to be closely monitored for insights into the health of the banking sector. For now, the sharp reduction in borrowings and increased deposits signal a brighter outlook for financial institutions and the wider economy.
