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Banks Pull ₦942bn From CBN Facility As Overnight Deposits Fall Below ₦4trn
Banks Pull ₦942bn From CBN Facility As Overnight Deposits Fall Below ₦4trn
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Banks’ deposits in the CBN’s Standing Deposit Facility fell by ₦941.85bn, or about 20 percent, to ₦3.76trn on October 7, 2026.
The decline followed placements of ₦4.86trn on October 5 and ₦4.70trn on October 6, reversing part of the September liquidity build-up.
The CBN’s data does not show where the withdrawn funds went, although the movement highlights changing overnight liquidity positions.
Channel
October 09, () – Nigerian banks reduced their overnight deposits with the Central Bank of Nigeria (CBN) by ₦941.85 billion in one day, pushing total placements below ₦4 trillion as liquidity positions shifted across the banking system.
Data from the apex bank showed that balances in its Standing Deposit Facility (SDF) fell to ₦3.76 trillion on October 7, 2026, from ₦4.70 trillion a day earlier.
The decline of about 20 percent was the largest one-day reduction since the end of September, when banks sharply reduced their placements following a period of elevated deposits with the central bank.
Banks had placed ₦4.86 trillion with the CBN on October 5 before reducing the balance by about ₦160 billion to ₦4.70 trillion on October 6.
The latest movement brought SDF placements to their lowest level since September 30, when deposits fell from ₦6.28 trillion to ₦4.55 trillion.
Banks Adjust Overnight Liquidity Positions
A representation of banks – Photo credit: ShutterstockThe Standing Deposit Facility allows banks to deposit excess funds with the CBN overnight without collateral. It forms part of the apex bank’s monetary policy framework for managing liquidity in the financial system.
A decline in SDF balances indicates that banks are holding less money overnight with the CBN. However, the daily figures alone do not establish whether the funds have moved into lending, securities, interbank transactions, or other uses.
The latest reduction comes amid changes in the CBN’s monetary policy stance following its September meeting.
On September 22, the Monetary Policy Committee reduced the Monetary Policy Rate by 350 basis points to 23 percent, marking a major adjustment in the benchmark rate during the current policy cycle.
The committee, however, retained key cash reserve requirements governing how much of banks’ deposits must be held with the central bank.
The Cash Reserve Ratio for commercial banks remained at 45 percent, while merchant banks continued to operate with a 16 percent requirement. The CBN also retained the 75 percent CRR on non-Treasury Single Account public-sector deposits.
The MPC adjusted the asymmetric corridor around the MPR to +50 basis points and -300 basis points, defining the interest-rate margins around the benchmark policy rate.
Liquidity Remains Fluid After Rate Cut
The fall in SDF placements follows the substantial build-up in overnight deposits recorded in September and the subsequent reductions at the end of that month.
Although the lower policy rate changes the benchmark cost of money in the financial system, the CBN’s reserve requirements remain a significant constraint on the proportion of deposit liabilities available to banks for other uses.
The latest data does not establish a direct causal link between the September rate cut and the ₦941.85 billion decline in SDF balances.
Instead, the movement shows that banks’ overnight positions can change substantially from one trading day to another as their liquidity needs and funding positions evolve.
The reduction also comes as the financial markets enter the final quarter of 2026, with market participants assessing the implications of the lower policy rate and the continuing management of banking-system liquidity.
Further daily data will be needed to determine whether the October 7 decline represents a sustained reduction in SDF placements or a temporary adjustment in banks’ overnight cash positions.
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