Banks reduced their overnight deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF) by N941.85 billion to N3.76 trillion on October 7, 2026, as excess liquidity in the banking system continued to fluctuate.
CBN data showed that SDF placements fell from N4.70 trillion on October 6 to N3.76 trillion on October 7, following a decline from N4.86 trillion recorded on October 5. The latest reduction represents the largest single-day drop in SDF placements since September 30.
The SDF is the CBN’s overnight, non-collateralised facility through which eligible banks place excess funds with the apex bank. The latest movement indicates that banks deployed or redirected a significant portion of the funds previously parked with the CBN.
SDF falls below N4trn
The latest decline pushed banks’ SDF balances below the N4 trillion mark for the first time after several days of elevated placements.
SDF deposits had risen sharply in September amid abundant system liquidity, reaching N7.34 trillion on September 23 and peaking at N7.52 trillion on September 24.
The balance subsequently fell to N5.90 trillion on September 25, rose to N6.01 trillion on September 28 and stood at N6.28 trillion on September 29 before dropping sharply to N4.55 trillion on September 30.
The October 7 balance of N3.76 trillion is about N3.76 trillion below the September 24 peak, highlighting the significant swings in banks’ excess liquidity over the past two weeks.
CBN continues liquidity management
The movement in SDF deposits comes against the backdrop of continued CBN liquidity management through Open Market Operations (OMO).
On October 6, the apex bank withdrew N3.31 trillion through an OMO auction, while N2.17 trillion in maturing OMO bills flowed back into the banking system, resulting in a net liquidity withdrawal of about N1.14 trillion.
The CBN’s liquidity management has continued even after the Monetary Policy Committee cut the Monetary Policy Rate (MPR) by 350 basis points to 23% on September 22.
The MPC retained the Cash Reserve Ratio (CRR) for commercial banks at 45%, merchant banks at 16%, and the 75% CRR on non-TSA public-sector deposits. It also reset the interest-rate corridor to +50/-300 basis points around the MPR.
The sharp movements in SDF balances therefore reflect the continuing interaction between excess banking-system liquidity, CBN sterilisation operations and the transmission of its more accommodative monetary-policy stance.
