Nigeria’s deposit money banks (DMBs) have parked nearly N7 trillion in excess cash at the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF), highlighting a persistent liquidity surplus in the country’s banking system. As of March 12, 2026, data from the apex bank showed deposits of N6.69 trillion, slightly down from N6.96 trillion a day earlier, underscoring banks’ preference to earn overnight interest rather than immediately increase lending.
The steady rise in deposits over the past week reflects a surge in liquidity inflows. Banks deposited N5.20 trillion on March 9 and N5.27 trillion on March 10, suggesting that the recent spike is linked to repayments of maturing government securities, which injected roughly N1.5 trillion into the financial system. Primary market repayments alone jumped to N711.55 billion on March 12 from N266.46 billion just three days earlier.
While government securities repayments have bolstered cash levels, fresh government borrowing has helped absorb part of the excess liquidity. The CBN recorded primary market sales of about N933.92 billion on March 11 and March 12, including Treasury bills and Federal Government bonds, as part of its strategy to mop up surplus funds. However, the scale of deposits at the SDF indicates that liquidity conditions in the banking system remain elevated despite these absorption efforts.
Bank opening balances with the CBN also declined gradually during this period, from N113.15 billion on March 10 to N77.23 billion on March 12, showing that funds were being redirected into government securities or the deposit facility. This demonstrates how banks are balancing opportunities to earn interest while maintaining liquidity, rather than increasing lending to the economy.
The CBN has intensified efforts to manage excess liquidity through a mix of tools, including the SDF, Open Market Operations (OMO), and Treasury bill auctions. In January alone, over N15 trillion was withdrawn via these mechanisms, and another N3.57 trillion was sterilized in February through short-term deposits. By offering an overnight interest rate of about 22.2% on SDF deposits, the apex bank continues to stabilize short-term rates and curb inflationary pressures while banks hold large volumes of idle cash.
source: nairametrics