Fresh facts have emerged that commercial and merchant banks borrowed N8.2 trillion from the Central Bank of Nigeria (CBN) in the first 17 days of the year 2025 to address the liquidity crisis.

The move, according to data provided by the apex bank, was part of efforts to tackle liquidity challenges in the financial sector and boost lending to the real sector of the Nigerian economy.

The borrowing, which was far below the N8.2 trillion they borrowed during the corresponding period in 2024, was necessary due to low cash deposits by bank customers, attributed to the high spending during the festive period, which created cash scarcity in banks.

The data from CBN showed that in 2024, both commercial and merchant banks borrowed an estimated N131.42 trillion amid increasing demand for cash. The N131.42 trillion borrowed in 2024 represented about a 636.6 per cent increase over the N17.84 billion banks and merchant banks operating in Nigeria borrowed in 2023.

Within the period under review, banks and merchant banks’ deposits in CBN stood at N6.69 trillion, amid their efforts to lend to the real sector of the economy. Commercial and merchant banks access lending from the CBN using the Standing Lending Facility (SLF) window.

They also deposit excess liquidity with the apex bank using the Standing Deposit Facility (SDF). The CBN provides the SLF, a short-term lending window, for banks and merchant banks to access liquidity to run their day-to-day business operations.

Specifically, about N21.74 trillion was borrowed by banks and merchant banks in March 2024, while the lowest amount of N2.9 trillion was borrowed in January 2024. These financial institutions in 2024 borrowed from the CBN at an interest rate of 32.50 per cent as the asymmetric corridor around the MPR was +500/-100 basis points.

The Director of the Financial Markets Department, CBN, Dr Omolara Duke, had in a circular stated that the apex bank allowed banks to borrow at a rate of 31.75 per cent when the MPR was at 26.75 per cent. Banks can access the SLF through the Scripless Securities Settlement System (S4) within the specified operating hours of 5:00 pm to 6:30 pm.

Additionally, authorised dealers are permitted to access the Intraday Lending Facility (ILF) at no cost, provided it is repaid on the same day.