Nigerian deposit money banks have placed over N1.6 trillion in the Central Bank of Nigeria’s Standing Deposit Facility, reflecting a surge in system liquidity and a cautious approach to lending.
Data from the CBN’s daily money market reports show that between October 14 and 17, 2025, banks consistently deposited large sums, peaking at N1.61 trillion on October 17, compared to N1.45 trillion on October 15.
The liquidity surge was partly driven by N481.33 billion in Open Market Operation (OMO) repayments on October 14, injecting fresh funds into the banking system. The CBN, however, made no new OMO issuances or primary market sales during the period.
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Despite high SDF placements, opening balances across banks dropped to N97.45 billion on October 17 from N150.72 billion the previous day, indicating uneven liquidity distribution. Some large banks maintained strong reserves, while smaller ones faced tighter funding positions.
The Standing Lending Facility, where banks borrow from the apex bank, recorded minimal activity during the week, highlighting the limited appetite for short-term borrowing.
Analysts attribute the buildup of idle funds to high policy rates and risk aversion amid macroeconomic uncertainty and exchange rate fluctuations. The overnight lending rate stood at 24.88%, encouraging banks to opt for risk-free returns.
While the liquidity buildup provides near-term market stability, experts warn that prolonged preference for CBN deposits over private-sector lending could restrict credit flow and slow economic recovery.
