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HomeBusiness NewsBanks Borrowed N3.03 Trillion from CBN, increase of 835% in Just 22...

Banks Borrowed N3.03 Trillion from CBN, increase of 835% in Just 22 Days

Banks in Nigeria have borrowed a significant amount of money, totaling N3.03 trillion, from the Central Bank of Nigeria (CBN) in just 22 days.

This is a huge increase of 835% compared to the amount borrowed in August, which was N323.97 billion.

This surge in borrowing indicates a serious shortage of available money in the banking system.

The banks accessed these funds through the CBN’s Standing Lending Facility (SLF), which is a short-term credit line that banks can use to cover immediate financial needs.

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Such a sharp increase in SLF borrowing usually suggests that banks are facing financial stress or have a lot of loans that are not being repaid.

This rise in borrowing is partly due to the CBN’s efforts to control the demand for foreign currency and curb inflation by tightening its monetary policies.

Over the past couple of years, the CBN has been taking measures like the Cash Reserve Requirement and Loan to Deposit Ratio policies to take large sums of money from commercial banks regularly.

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Despite this, the Monetary Policy Committee of the CBN insists that the Nigerian banking sector remains stable and resilient.

They mention that key indicators like the Capital Adequacy Ratio (CAR), Non-Performing Loan (NPL) ratio, and liquidity ratio are within acceptable limits.

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Nevertheless, we need to mention that there is an hightened cost of operation in the banking sector and it is a cause for concern and needs a careful attention.

If you compare the banks in Nigeria with banks in other countries it would be seen that the Nigerian bank allocate a large portion of the income to the cost of operation…[CONTINUE READING HERE]>>

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