Banks Flood CBN with Over N1.6 Trillion as Liquidity Surges
Nigeria’s deposit money banks (DMBs) have significantly increased their placements at the Central Bank of Nigeria (CBN), depositing over N1.6 trillion through the Standing Deposit Facility (SDF) as liquidity conditions in the financial system continue to surge.
Fresh data from the CBN’s daily money market reports show that between October 14 and 17, 2025, banks consistently parked excess cash at the apex bank, with total deposits peaking at N1.61 trillion on Friday, October 17, compared to N1.45 trillion on October 15.
The steady rise in SDF placements indicates that commercial banks are holding substantial idle balances amid limited lending opportunities in the real sector. Financial analysts suggest the trend reflects a combination of cautious lending behavior, high system liquidity, and tight monetary policies that have constrained credit expansion.
The Standing Deposit Facility is a monetary policy tool that allows banks to deposit excess funds with the CBN and earn interest, thereby managing liquidity and stabilizing short-term rates in the interbank market.
Analysts note that the surge in SDF deposits underscores the liquidity glut currently characterizing the Nigerian banking system. “It suggests that banks prefer the safety of the CBN’s deposit window over taking on credit risks in the private sector, especially in a high-interest, inflationary environment,” one market observer said.
The development comes as the CBN maintains its tight monetary stance to combat inflation and stabilize the naira, following several months of aggressive rate hikes under its inflation-targeting framework.
Experts say while the liquidity build-up could help keep money market rates stable in the short term, it may also point to subdued lending activity, which could slow economic recovery efforts if sustained.
