Worry looms over the Nigerian banking sector as the Standing Deposit Facility (SDF) of banks witnesses an 18% decline, plummeting from N2.94 trillion in October to N2.4 trillion in November. This unsettling trend is attributed to the ongoing cash scarcity in the country.

Simultaneously, the Standing Lending Facility (SLF) has seen a staggering 559% month-on-month increase, reaching N376.64 billion in November from N57.14 billion in October. This surge raises concerns about liquidity within Nigeria’s financial landscape, according to financial data from the Central Bank of Nigeria for November 2023.

Despite the Central Bank’s reassurance on December 11 that Nigerian banks remain resilient, the substantial drop in the SDF and the surge in the SLF have ignited apprehensions. The decline in the SDF is linked to reduced cash deposits, a consequence of the persistent shortage of Naira.

To address the issue, the Central Bank suspended processing fees on large cash deposits. This move followed the CBN’s attribution of the cash crunch to significant withdrawals from its branches by Deposit Money Banks and panic withdrawals from ATMs by customers.

In an interview with DAILY POST, Dr. Uju Ogunbunka, the President of the Bank Customers’ Association of Nigeria, emphasized the ongoing Naira scarcity, stating, “The problem is that people do not have the money to buy because Naira is scarce. What is paramount now is the availability of cash.”

Elegede Segun, the secretary-elect of the Association of Mobile Money and Agent Banking Industry in Nigeria, echoed Ogunbunka’s concerns about Naira scarcity, noting a shift away from banks for cash among their members. Segun added, “Our members no longer rely on banks for cash; we’ve shifted our focus to alternative merchants. And this means we have to pay more to get cash.”

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