Banks’ borrowings from the Central Bank of Nigeria (CBN) through the Standing Lending Facility (SLF) plummeted by 97.6% month-on-month (MoM) to ₦380 billion in April, down from ₦16.5 trillion in March 2025, indicating improved liquidity in the banking system.

Financial data from the CBN revealed that banks borrowed a total of ₦50.46 trillion in the first quarter of 2025 (Q1’25), representing a 161.5% increase compared to ₦31.25 trillion recorded in Q1’24.

 

The apex bank provides two primary short-term lending windows for banks: the SLF and Repurchase (Repo) lending. Under the SLF, the CBN lends to banks at an interest rate of 500 basis points above the Monetary Policy Rate (MPR). Repo transactions involve the temporary purchase of banks’ securities with an agreement to resell at a later date, usually at a premium.

 

Conversely, the CBN accepts deposits from banks through the Standing Deposit Facility (SDF), offering interest at MPR minus 100 basis points.

 

Reflecting the healthier liquidity conditions, banks’ deposits of idle funds with the CBN via the SDF rose by 3.08% MoM to ₦16.7 trillion in April, up from ₦16.2 trillion in March 2025.

This builds on the significant increase recorded in Q1’25, when banks’ SDF placements surged by 957% quarter-on-quarter (QoQ) to ₦19.2 trillion from ₦1.82 trillion in Q1’24, indicating stronger liquidity in the interbank money market.

The surge in SDF activity follows the CBN’s adoption of a single-tier remuneration structure for the SDF. Under this framework, all SDF deposits are now remunerated at MPR minus 100 basis points. With the MPR currently at 27.5%, the effective SDF rate stands at 26.5%.