Depository banks (DMBs) borrowed N595.34 billion from the Central Bank of Nigeria (CBN) between January and February, according to the CBN’s monthly economic report.

The report showed that while 333.59 billion naira was borrowed through the standing loan facility in January, the amount was reduced to 255.75 billion naira in February.

The CBN said that increased liquidity in the banking system has led to a reduction in the amount borrowed by credit institutions.

The report states: “The moderate activities of the SLF window and the strong use of the Permanent Deposit Facility confirm the increase in liquidity in the banking system. Activities at the Standing Facility window reflected the easing of liquidity in the banking system during the period under review.

“Total SDF increased significantly by 60.79% to N472.38 billion from N293.79 billion in January 2022. Conversely, SLF transactions decreased by N24.69 %, to 255.75 billion naira, compared to 339.59 billion naira in January 2022.”

According the puncha former president of the National Accountants Association of Nigeria, Dr. Sam Nzekwe, said banks borrow from the CBN as a lender of last resort.

According to him, banks also keep part of their savings with the CBN.

He said: “Banks need to take CBN because it is the bank of last resort. The CBN also keeps some of its money which it cannot lend.

Speaking on liquidity in the sector in the period following a monetary policy meeting, CBN Governor Godwin Emefiele said members noted that the growth rate of broad money supply ( M3) had risen to 2.12% in February 2022, from 1.74% in January 2022.

This was largely attributed to an increase in the growth rate of net domestic assets to 5.78% in February 2022 from 2.62% the previous month.

He said: “With regard to money market developments, the Committee observed the movement of money market rates around the asymmetric corridor, reflecting the prevailing liquidity conditions in the banking system.

“As a result, the weighted average monthly open repurchase and interbank call rates decreased to 5.81 and 9.30% in February 2022, from 6.00 and 16.00% in January 2022, respectively. The drop in rates reflects liquidity conditions in the banking system.