Deposit money banks increased the volume of excess funds placed with the Central Bank of Nigeria (CBN) in July, with deposits through the apex bank's Standing Deposit Facility (SDF) rising sharply amid improved liquidity in the banking system.
Latest financial data released by the CBN showed that banks' deposits under the SDF surged to N83.95 trillion in July 2026 from N10.9 trillion in the corresponding period of 2025, representing a year-on-year increase of 670.2 per cent.
At the same time, commercial banks significantly reduced their reliance on the CBN's Standing Lending Facility (SLF), with borrowings dropping by 82 per cent to N1.19 trillion in July 2026 from N6.63 trillion recorded in July last year.
The contrasting movements indicate that banks had sufficient liquidity to meet their short-term funding needs, limiting the need to borrow from the central bank.
The Standing Deposit Facility enables banks to deposit surplus funds with the CBN, while the apex bank provides short-term financing through the Standing Lending Facility and repurchase (Repo) operations.
Under the SLF, banks can access overnight credit at an interest rate set 500 basis points above the Monetary Policy Rate (MPR). Repo transactions, on the other hand, involve the temporary sale of securities to the central bank with an agreement to repurchase them at a predetermined date and price.
Analysts say the sharp rise in SDF deposits, coupled with the decline in borrowings, reflects stronger liquidity conditions in the financial system.
The figures come against the backdrop of the CBN's decision to maintain its tight monetary policy stance despite easing inflationary pressures.
At its latest Monetary Policy Committee (MPC) meeting, the apex bank retained the Monetary Policy Rate at 26.5 per cent, while keeping the asymmetric corridor around the benchmark rate at +500 basis points and -450 basis points.
The committee also left the Cash Reserve Ratio (CRR) for commercial banks unchanged at 45 per cent, retained the 16 per cent CRR for merchant banks and maintained the 75 per cent CRR on non-Treasury Single Account public sector deposits.
The decision signalled the central bank's resolve to sustain monetary tightening as it seeks to keep inflation under control, stabilise financial markets and preserve confidence in the economy.
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