The spiral effect of the rapidly falling oil prices is hitting hard at banks with a mere withdrawal of the Nigerian National Petroleum Corporation (NNPC) fund from the system raising overnight rate to 60 per cent, a few space shy from the 70 per cent it climbed weeks back.
The quarantine funds by the Central Bank of Nigeria (CBN) from banks, in a bid to stifle inflation has laid bare the weakness of Nigerian banks.
Interbank overnight lending rates spiked 15 percentage points on Monday to 60 per cent, from 45 per cent on Friday, after the state-owned energy firm recalled a portion of its deposits with commercial lenders to its account with the central bank, traders said. 
The cost of borrowing among banks has oscillated between a high of 70 per cent and a low of 14 per cent since last month, when the central bank hiked the cash reserve requirement (CRR) on private sector deposits with commercial lenders to 20 per cent, from 15 per cent. 
NNPC last week sold about $300 billion naira to some lenders as part of its usual month-end dollar sales and put the naira proceeds into its account with the central bank.