Banks dump N641.33bn excess cash with CBN in 2 weeks —Investigation
INVESTIGATIONS carried out by the Nigerian Tribune have revealed that Deposit money banks for the past two weeks have deposited the sum of N641.33 billion with the Central Bank of Nigeria (CBN), being excess monies not being lent out.
The lenders are placing these funds in order to earn nine per cent interest rate, rather than lending them to investors in the manufacturing and agricultural sectors of the economy.
Nigerian Tribune had two weeks ago reported that deposit money banks (DMBs) dumped a surplus sum of N422.76 billion with the CBN.
These transactions were carried out through the Standing Deposit Facility (SDF) worth N431.43 billion which outweighed the Standing Lending Facility (SLF) worth N8.67 billion.
Also, last week, a total SDF worth N225.27 billion was deposited, which outweighed the Standing Lending Facility worth N6.70billion borrowed from the apex bank.
The transactions according to sources, were indicative of financial system liquidity ease in line with industry expectations.
The Standing Deposit Facility provides a window for banks to place their surplus cash with the CBN at 9 per cent interest rate.
On the other hand, SLF is a window through which banks borrow funds from the CBN at 16 per cent to enable them meet their short-term cash needs.
In a similar development, data from the CBN showed that Currency-in-Circulation (CIC) fell marginally by 1.0 per cent to N2.157 trillion as at end-December 2017, compared with the level of N2.179 billion in 2016.
The decrease in CIC according to the CBN reflected developments in economic activities, as well as positive impact of the cashless policy of the bank.
A breakdown of the CIC indicated that the proportion of higher denomination banknotes (N100, N200, N500 and N1000) fell from 44.4 to 41.9 in volume terms and from 97.6 to 96.9 per cent in value terms in 2017, respectively.
The higher denomination banknotes were predominant, as these constituted 53.3 and 96.9 per cent, in volume and value terms, respectively, of the total banknotes in circulation in 2017.