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BREAKING:Bank borrowing from CBN rises 27% to N4.5tn

In the midst of a rising liquidity crunch, banks working in Nigeria acquired an astounding amount of N4.5tn from the Central Bank of Nigeria in July, an increment of 27% Month-on-Month from N3.6tn acquired in June 2022.

Banks utilize Standing Lending Facility and Repo loaning to get to transient loaning from the zenith bank.

While the CBN loans cash to banks through the SLF at a financing cost of 100 premise focuses over the Monetary Policy Rate as of now at 14%, it likewise loans cash to banks through Repurchase Arrangement (Repo).

Repos are generally thought to be safer because of their momentary development status and the sponsorship of the public authority.

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In the month under audit, the CBN monetary information shows that banks acquiring through the SLF dropped by 24.37 percent MoM to N1.46tn in July, from N1.93tn in June, while getting through Repo course of action rose pointedly in July by 86.1 percent MoM to N3.07tn from N1.65tn in June 2022.

The Vice President, Highcap Securities Limited, Mr. David Adnori, communicated vulnerability over the country’s economy, saying the climb in financing cost and increasing expansion rates had constrained many banks to the CBN loaning window particularly in July.

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He expressed, “Banks without liquidity could have trigger the high acquiring from the CBN. Moreover, financial vulnerability has begun to surface following the 2023 general races.”

Likewise, talking, the Chief Executive Officer, Cowry Asset Management Limited, Johnson Chukwu, connected the advancement to low liquidity with respect to the banks.

He said, “”The degree of contribution of FAAC was not exactly high in that frame of mind, there was no significant inflow into the monetary framework and around the same time of July, there was a significant outpouring including the N180bn Dangote credit.

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“So those outpourings influenced pressures on the bank’s framework liquidity that constrained banks to expand their acquiring from the loaning office.”

In the mean time, further discoveries showed that banks during the initial seven months of 2022 acquired N13.36tn, addressing a decay of 24% from N17.9tn acquired in the earlier seven months of 2021.

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