Nigerian Banks Withdraw ₦942bn from CBN Facility as Overnight Deposits Drop to ₦3.76trn
Nigerian banks have withdrawn approximately ₦941.85 billion from the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF), bringing their overnight deposits below the ₦4 trillion threshold amid changing liquidity conditions in the financial sector.
Data from the apex bank showed that deposits under the facility declined to ₦3.76 trillion on October 7, 2026, from ₦4.70 trillion recorded a day earlier. The reduction represents a drop of about 20 per cent within 24 hours. <Cite refs={[“turn749950search0″,”turn749950search4”]}/>
The latest development followed deposits of ₦4.86 trillion on October 5, indicating a gradual reduction before the more substantial withdrawal recorded on October 7.
The decline also marks the lowest level of overnight placements since September 30, when banks reduced their deposits from ₦6.28 trillion to ₦4.55 trillion.
Banks Adjust Their Liquidity Positions
The Standing Deposit Facility allows banks to place excess funds with the CBN overnight and earn interest. The mechanism is one of the monetary authority’s instruments for managing liquidity and maintaining stability within the financial system.
A reduction in deposits under the facility means banks are holding less money overnight with the apex bank. However, the available figures do not establish precisely where the withdrawn funds have been redirected.
The money could have been deployed into lending, securities, interbank transactions or other financial obligations, but the CBN’s daily data does not confirm which of these activities accounted for the movement.
The latest figures highlight the continued fluctuations in banks’ liquidity positions following the substantial accumulation of overnight deposits recorded in September.
CBN’s Interest Rate Adjustment
The development comes after the CBN’s Monetary Policy Committee reduced the Monetary Policy Rate (MPR) by 350 basis points to 23 per cent at its September 21–22, 2026 meeting.
Despite the reduction, the committee retained key cash reserve requirements governing the proportion of deposits banks must maintain with the central bank.
The Cash Reserve Ratio for commercial banks remains at 45 per cent, while merchant banks continue to operate with a 16 per cent requirement. The 75 per cent reserve requirement on non-Treasury Single Account public-sector deposits was also retained. <Cite refs={[“turn749950search2”]}/>
The committee also adjusted the asymmetric corridor around the benchmark rate to +50 basis points and -300 basis points, establishing the interest-rate boundaries for the CBN’s standing facilities.
These measures form part of the central bank’s broader monetary policy framework for managing inflation, interest rates and liquidity in the banking system.
Liquidity Trends Remain Uncertain
The substantial reduction in overnight deposits suggests that banks’ short-term funding positions are changing as they respond to liquidity requirements and opportunities in the financial markets.
However, it remains unclear whether the latest decline represents a sustained shift away from the CBN’s deposit facility or a temporary adjustment in banks’ cash management strategies.
Market participants will likely monitor subsequent CBN data to determine whether overnight deposits continue to fall or return to higher levels.
As Nigeria enters the final quarter of 2026, the interaction between monetary policy decisions, reserve requirements and changing liquidity conditions is expected to remain an important factor shaping activity in the banking and financial markets.
Further data will be needed to establish the direction and duration of the latest movement in banks’ overnight deposits.
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