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 CBN data, this was part of efforts to address liquidity issues in the financial sector and support loans to the real sector of the economy.
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.
According to The Guardian, 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.
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).
In related news, TimesNow.com.ng reported that as of September 2024, 95.66% of borrowers owed money to microfinance banks (MFBs).
This shows how important MFBs are in providing loans, especially for individuals and small businesses.
Out of 6,537 total borrowers recorded across all lending institutions, 6,253 were linked to MFBs, emphasizing their key role in offering credit.
However, the number of MFB borrowers slightly decreased from 6,573 in August 2024 to 6,253 in September 2024.
Source: TimesNow.com.ng
