CBN liquidity lending to non-interest institutions hits N129.71bn

Transactions under the Central Bank of Nigeria’s (CBN) Funding for Liquidity Facility (FfLF) increased sharply in 2025, reflecting heightened demand for short-term liquidity by financial institutions amid the country’s tight monetary policy environment. According to the CBN in its 2025 annual report, transactions through the facility rose to N129.71 billion, a 61.1% increase from N80.51 billion recorded in 2024. The FfLF is an overnight financial instrument introduced by the CBN to provide short-term, zero-interest liquidity support exclusively for licensed Non-Interest Financial Institutions (NIFIs). Introduced in 2017, the facility aids liquidity management and deepens the financial system. Authorized NIFIs must provide eligible securities as collateral, with a minimum value of 110% of the facility amount. For example, a NIFI borrowing N10 billion would need collateral worth N11 billion. Acceptable collateral includes CBN Safe Custody Account Deposits, CBN Non-Interest Notes, CBN Asset-Backed Securities, Sukuk with CBN liquidity status, Warehouse Receipts, and other CBN-designated assets. The facility operates between 2.00 PM and 3.30 PM daily and terminates at the start of the next business day. Although accessed on only 12 days in 2025 (down from 75 days in 2024), the average transaction value surged to N10.81 billion per day, up from N1.07 billion in 2024. The CBN raised the administrative fee to N20 million, four times the previous N5 million. The fee aligns with the prevailing monetary policy stance. The FfLF supports financial stability by ensuring institutions meet settlement obligations. A financial analyst, Mr. Ayokunle Olubunmi, noted that NIFIs rely on this facility to manage capital pressures, particularly after the 2025 hike in the Cash Reserve Ratio (CRR). Some NIFIs, like Jaiz Bank PLC, Lotus Bank, and Taj Bank, benefit from this liquidity window. Olubunmi emphasized that non-interest banks face stricter capital requirements compared to conventional banks, making the FfLF crucial for their operations.