Nigeria’s banking sector witnessed a significant shift in liquidity management as commercial banks dramatically increased their deposits with the Central Bank of Nigeria (CBN). Fresh financial data released by the apex bank shows that deposits placed through the Standing Deposit Facility (SDF) soared by an impressive 670.2 percent year-on-year, climbing from N10.9 trillion in July 2025 to N83.95 trillion in July 2026. The remarkable increase signals stronger liquidity across the country’s banking system and highlights changing financial strategies among commercial lenders.
While deposits surged, banks significantly reduced their reliance on borrowing from the CBN. Figures revealed that lending through the Standing Lending Facility (SLF) dropped by 82 percent over the same period, falling from N6.63 trillion in July 2025 to N1.19 trillion in July 2026. The sharp decline suggests that banks now have greater access to internal funds, reducing the need to obtain short-term financing from the apex bank.
The Central Bank uses the Standing Deposit Facility to absorb excess liquidity from financial institutions, while the Standing Lending Facility and Repurchase (Repo) arrangements provide short-term funding when banks require additional cash. Borrowing through the SLF attracts an interest rate that is 500 basis points above the Monetary Policy Rate (MPR), while Repo transactions involve the temporary sale of securities with an agreement to repurchase them later at a higher price. These tools help the CBN maintain stability within Nigeria’s financial system.
Analysts say the sharp increase in deposits, coupled with the steep decline in borrowing, reflects a healthier liquidity position among banks despite the country’s challenging economic environment. It also suggests that financial institutions are managing their cash reserves more effectively, allowing them to meet operational needs without depending heavily on the central bank for emergency funding.
The latest figures come shortly after the CBN retained its Monetary Policy Rate at 26.5 percent, alongside existing Cash Reserve Ratio (CRR) requirements for commercial and merchant banks. By keeping these key monetary policy measures unchanged, the apex bank has reaffirmed its commitment to tackling inflation through tight monetary policies while ensuring financial system stability. Market watchers believe the latest banking data reinforces the effectiveness of the CBN’s liquidity management framework as it continues its inflation-control strategy.
source: vanguard
