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Banks’ borrowings from the Central Bank of Nigeria (CBN) through the Standing Lending Facility (SLF) saw a sharp decline of 97.6% month-on-month (MoM) in April, dropping to ₦380 billion from ₦16.5 trillion in March 2025. This significant reduction indicates 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), marking a 161.5% increase compared to ₦31.25 trillion recorded in Q1’24.
The CBN offers two main short-term lending windows for banks: the SLF and Repurchase (Repo) lending. Under the SLF, the CBN lends to banks at an interest rate 500 basis points above the Monetary Policy Rate (MPR). Repo transactions involve the temporary purchase of banks’ securities with an agreement to resell them at a later date, typically at a premium.
In contrast, the CBN accepts deposits from banks through the Standing Deposit Facility (SDF), offering interest at MPR minus 100 basis points.
Reflecting the improved 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 growth builds on the substantial increase recorded in Q1’25, when banks’ SDF placements surged by 957% quarter-on-quarter (QoQ), reaching ₦19.2 trillion compared to ₦1.82 trillion in Q1’24. This surge points to stronger liquidity in the interbank money market.
The uptick in SDF activity follows the CBN’s implementation of a single-tier remuneration structure for SDF deposits. Under this new 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%.
