Despite improving micro and macroeconomic indices of the Nigerian economy, including the GDP growth and declining headline inflation rates, banks’ borrowing from the Central Bank of Nigeria’s (CBN’s) Standing Lending Facility (SLF) decreased by 89 percent to N126 billion in August 2026 from N1.19 trillion in the preceding month.
The development reflected that liquidity in the banking system had surged but business owners’ appetite for borrowing continued to weaken in the month under review.
According to CBN’s latest Financial Data for August 2026, the banks’ deposits in its Standing Deposit Facility (SDF) also declined by 1.14 percent to N82.99 trillion in August 2026 from N83.95 trillion in July 2026.
In line with its monetary policy, the CBN normally lends money to banks through the SLF at interest rate of 500 bases points (bps) above the benchmark Monetary Policy Rate (MPR), as well as through Repurchase (Repo) arrangement, which involves the purchase of banks’ securities with the agreement to sell back at a specific date and usually for a higher price.
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The lower rate of borrowing by the deposit money banks is coming despite the retention by the Monetary Policy Committee of the apex bank of the MPR at 26.5 percent while retaining other policy parameters at its last meeting.
This implies that the cost of commercial banks borrowing from the CBN moderated and should, therefore, encourage businesses and individuals to borrow from the lenders at reduced interest rates.
