Banks Deposit N77.19tn with CBN in 19 Days as Rate Drops to 20%

Kayode Tokede  

Following the push for overnight interest and safe haven for excess liquidity, Nigerian banks in 19 days of business activities for the months of September 2026 deposited an estimated N77.19 trillion with the Central Bank of Nigeria (CBN). 

Banks deposit excess cash with CBN using the Standing Deposit Facility (SDF) window and borrow from the apex banking regulatory body  through Standing Lending Facility (SLF). 

According to the financial data of the CBN, the average amount deposited so far in September 2026 stood at N4.06 trillion. In terms of lending, the CBN borrowed Nigerian banks an estimated N920 billion  in the period under review. 

The CBN data revealed that Nigerian bank’s deposits declined by 1.14 per cent Month-on-Month (M-o-M) to N82.99 trillion in August 2026 as against N83.96 trillion recorded in July 2026.  

The 1.14 per cent MoM can be attributable to cut in the Monetary Policy Rate (MPR) to 26.50 per cent in February 2026 from 27 per cent 2025, reducing Non Performing Loan (NPL), seeking an attractive interest overnight, making it a preferred option for banks to earn risk-free returns, among other factors.  

The September 22, 2026 outcome of the Monetary Policy Committee (MPC) of the CBN may further force banks to reduce access to the standing facilities window. 

As the members voted to reset the MPC  at 23 per cent and recalibrate the Standing Facilities corridor to +50/-300 basis points around the MPR, the overnight rate on the SDF dropped to 20 per cent from previous 23 per cent. 

CBN data revealed that SDF was at N89.3  trillion in June 2026; N87.13trillion in May 2026  and N92.32 trillion in April 2026.

The numbers showed that banks’ deposit in March 2026 was the highest with about N128.92 trillion.  In February 2026, it  stood at  N61.11  trillion,16.18  per cent increase when compared to N52.6 trillion deposited in January 2026. 

The statistics showed that in eight months of 2026, banks have deposited an estimated N678.36 trillion , about 610.58 cent Year-on- Year (YoY) increase over N95.47 trillion in the eight months of 2025. 

THISDAY had reported that an estimated N336.2 trillion was  deposited with the CBN in 2025, about 777.2 per cent YoY increase over N38.33trillion deposited in 2024.

Analysts at Cordros Research in a report after the September 22 MPC meeting stated that the adjusted the asymmetric corridor around the MPR to +50/–300bps (previous: +50/–450bps), is aimed at narrowing the gap between the MPR and the lower bound. 

They said, “The adjustment should strengthen the transmission of policy decisions to short term market rates and reinforce the MPR’s signalling role. Accordingly, the Standing Lending Facility rate declined to 23.50per cent (previous: 27.00per cent), while the Standing Deposit Facility rate fell to 20.00per cent (previous: 22.00per cent),”Cordros Research explained. We expect market performance to be shaped by the extent to which the policy adjustment translates into lower market yields, improved liquidity and reduced corporate financing costs. 

“Continued macroeconomic stability, particularly in inflation and the exchange rate, will also remain important to investor sentiment. Against this backdrop, 2026FY earnings and dividend announcements, foreign and domestic portfolio flows, corporate actions and company-specific developments are likely to be the key drivers of the market performance in Q4-26.”

Governor, CBN, Olayemi Cardoso at the meeting noted that the bank’s ongoing repair of the monetary policy implementation framework, including the adoption of NOFR as a transaction-based operational benchmark, has improved the transparency of money market operations. 

“The Committee therefore considered a reset of the MPR and recalibration of the corridor appropriate to better align the monetary policy implementation framework with market realities. 

“This would strengthen policy transmission and restore the MPR as the principal signal of monetary policy. Members emphasized that the recalibration represents an operational realignment of the framework and should not, in itself, be construed as a change in the underlying policy stance,”Cardoso  said.. 

Commenting, the Chief Research Officer, Investdata Consulting Limited,  Ambrose Omordion stated that banks are playing safe to guide against NPL with the massive deposit with  CBN.

According to him, bank customers over time are faced with loan repayment and banks depositing with CBN makes better business decisions as it is safe.

He explained that, “Mind you, the interest rate in the financial sector is high and lending loans to customers becomes a major challenge. This alone has contributed to banks lending to CBN and investing in fixed deposits  where it is risk free and comes with interest overnight.

“If we see further rate cuts by CBN, that  alone may force banks to lend to the real sector and reduce depositing excess liquidity  with the CBN.   However, we expected the real sector to benefit from the bank’s recapitalisation amid supporting the Federal Government to achieve its $1 trillion economy.”