CBN findings have revealed that banks’ borrowings from the apex bank, which had decreased month over month in February of this year by 14%, abruptly skyrocketed by 775 percent to N3.97 trillion in March before falling by 45.8 percent to N2.15 trillion in April.
According to Vanguard, the information also revealed that bank deposits under the Standing Deposit Facility of the apex bank increased YoY by 26% to N1.72 trillion in Q1 23 from N1.36 trillion in Q1 22.
In January, the banks deposited N584.79 billion. In February, the amount increased by 14% to N668.86 billion, while in March, it decreased by 29.5% to N471.4 billion.
The numbers also show that while deposits saw a 14 percent gain in February, a major downward trend started in March and continued into April, reflecting a true cash shortage in the money market.
The increase in bank borrowings from the SLF runs counter to the infusion of cash into the banking system at the time after the CBN’s cashless policy action.
Remember that the CBN redesigned the N200, N500, and N1,000 notes and established a timeframe for when the previous notes would no longer be valid?
The CBN Money and Credit data for January during that time period revealed that Nigerians in response to the initial deadline, deposited N1.81 trillion into the banking system in January.
So, from N2.6 trillion in December 2022 to N788.9 billion in January 2023, Currency Outside Banks, decreased month over month by 70%.
However, after the Supreme Court extended the expiration date of the N200, N500, and N1,000 old notes to December 31, 2023, CoB has continued to increase.
In February, CoB reached N843 billion, while in March, it reached N1.44 trillion. Similar to this, CoB also climbed to N2.07 trillion in April.
