Nigerian banks and merchant banks have borrowed approximately N7.04 trillion from the Central Bank of Nigeria (CBN) to meet the rising customer demand driven by increased commercial activity.

Also known as the Standing Lending Facility (SLF), it is a line of short-term credit that Nigerian banks and merchant banks can access when they need to cover their customers' immediate short-term withdrawals.

Data indicates that banks and other financial institutions have borrowed from the CBN during the first ten days of December 2024 at a rate of 32.50% rise, which was the asymmetric corridor surrounding the MPR at +500/-100 basis points.

The financial institutions were borrowing from the CBN at a rate of 32.25% as of November 2024, when MPR was at 27.25% until it was raised to 27.50%.

According to information from the apex bank's financial data, banks and merchant banks borrowed N114.6 trillion in the first 11 months of 2024, which is around 579 percent more than they borrowed in the same period in 2023 (N16.87 trillion).

Since the Monetary Policy Committee raised the Monetary Policy Rate (MPR) in 2024, the interest rate at which these banks borrow from CBN has changed.

The CBN members decided to raise MPR to a record high of 27.50% at the end of the November 2024 meeting.

In keeping with its duty to address inflation and the uncertain value of the Naira on the foreign exchange market, the MPC members have so far in 2024 decided to raise interest rates from 18.75% to 27.50%.

Dr. Omolara Duke, Director of the Financial Markets Department at the CBN, said in a press statement that while the MPR was at 26.75%, the apex bank permitted banks to borrow at a rate of 31.75%.