Banks have increasedtheir deposit with theCentral Bank of Nigeria, CBN, by 907.3 percent Year-on-Year, YoY, to N68.9 trillion in the first half of the year H125 from N6.84 trillion in the corresponding period of 2024 H124, reflecting excess liquidity in the banking system.
CBN accepts deposits from banks through its Standing Deposit Facility SDF and pays an interest rate of MPR minus 100 bpts.
On the other hand, the apex bank has two short term lending windows for banks namely the Standing Lending Facility SLF and Repo lending.
It lends money to banks through the SLF at interest rate of 500 basis points bpts above the Monetary Policy Rate MPR, and it also lends money to banks 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.