Banks’ everyday CBN loans hit N216b

Banks' typical daily loan demands from the Reserve bank of Nigeria (CBN) stands at N216.34 billion due to the apex banks's difficult financial policy, according to a CBN's Financial Market Department Annual Activity Report.The Monetary Policy Rate (MPR)-- benchmark interest-- has actually remained at 14 per cent given that July 2016 regardless of rising calls from economists for a lower interest rate. This has actually raised banks 'need for CBN's loans to improve their liquidity.The. loans, which came as Standing Loaning Facility( SLF), were for each of the 246 days captured in 2017, from which Intra-day Liquidity Facility( ILF )conversion was N130.63 billion, representing 60.38 percent of the total request.The report launched at the weekend, revealed the typical day-to-day interest charged was N159.96 million.The SLF

and SDF were readily available for market individuals to square up their positions or invest excess funds at the close of business

. Intra-day Liquidity Facility(ILF)was accessible as short-lived credit to the banks to satisfy their financing requires within the operating hours of the CBN Inter-bank Funds Transfer System (CIFTS ). The report signed by CBN Director, Financial Markets Department, ALvan Ikoku, attributed the bank's rising borrowing from the CBN to tough financial policy steps, which kept the Monetary Policy Rate (MPR)- benchmark interest rate at 14 percent throughout the year." In 2016, the average everyday request for SLF was N130.47 billion in 207 days, out of which ILF conversion was N84.62 billion, while average day-to-day interest income was N94.76 million.

The higher patronage at the window in 2017 showed the impact of the tight monetary policy stance," it said.Ikoku stated banks asked for the standing centers to square-up their positions by obtaining from the CBN(SLF)or transferring excess funds( SDF)at the end of each service day."The trend at the window showed more frequent option to the SLF

, than in 2016 due to the tight financial policy position. The threshold for daily deposits per institution at the SDF stayed N7.5 billion in the CBN thrust to curtail unbridled demands by market individuals and motivate providing to the economy. Applicable rates for the SLF and SDF also stayed 16 and nine per cent. The rates were anchored to the MPR," it added.According to the report, patronage at the SDF window decreased to a typical day-to-day quantity of N41.90 billion for the 230 days in 2017, from N76.11 billion for the 246 days in 2016. It stated the typical daily interest payments on the deposits decreased to N14.86 million in the review duration, from N20.01 million in 2016. The lowered volume of deals in the year was due to tight financial operations and the sale of forex to authorized dealerships."Liquidity management was conducted through the usage of Open Market Operation (OMO)as the primary instrument of financial policy, complemented by discount rate window activities, CRR and interventions in the forex market,"it added.The financial market report stated the difficulty of reducing inflation, promoting increased

capital inflows and restoring the economy to the course of development was vital in the bank's policy mix." In extension of the contractionary monetary policy position, the limits of the financial policy instruments showed that MPR

was maintained at 14 percent, with an asymmetric corridor of +200/ -500 basis points for the Standing Lending Center (SLF)and Standing Deposit Facility( SDF ), respectively.In addition, the CRR and Liquidity ratios remained 22.50 and

30.00 per cent, respectively,"it added.It stated the liquidity levels in the banking system were influenced by regular financial injections(making up Statutory Profits Allocation(SRA ), Value Included Tax(BARREL), non-oil profits and the refund of the Paris Club deductions, among others). The report said withdrawal of naira by the CBN through the sale of forex drained pipes liquidity more and pushed market rates upwards