Banks’ deposits with CBN fall 87% to N1.22trn

•As borrowings drop 98% By Elizabeth Adegbesan Banks’ deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF) fell by 87 per cent month-on-month to N1.22 trillion in October 2026 from N9.4 trillion in September. The breakdown of CBN’s financial data for the end of October 2026 also show that banks’ borrowing from the apex bank through its Standing Lending Facility (SLF) declined by 98 per cent month-on-month to N15 billion in October from N920 billion in September.

The CBN operates two short-term lending windows for banks: the SLF and Repurchase (Repo) facility. Under the SLF, the apex bank provides liquidity to banks at an interest rate above the Monetary Policy Rate (MPR). Through the Repo facility, it provides funds by purchasing banks’ securities with an agreement to resell them at an agreed date and price.

On the other hand, the CBN accepts surplus funds from banks through the SDF, providing them with an avenue to earn interest on excess liquidity. The decline in both deposits and borrowings indicates a significant reduction in banks’ recourse to the CBN’s liquidity management facilities during the review period. Recall that the apex bank recently reduced the MPR to 23 per cent from 26.5 per cent.

Following the adjustment, the SLF rate was reduced to 23.5 per cent, representing 50 basis points above the MPR, from 27 per cent previously. Similarly, the SDF rate was cut to 20 per cent, representing 300 basis points below the MPR, from 22 per cent. The adjustment reduced the cost of accessing liquidity through the SLF and the return on surplus funds deposited through the SDF.

The narrower gap between the two rates could influence banks’ liquidity management decisions, potentially encouraging greater deployment of funds into lending and other investment opportunities rather than keeping excess liquidity with the apex bank.