Nigeria’s deposit money banks (DMBs) placed nearly N7 trillion in excess liquidity at the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF) as of March 12, 2026, underscoring a persistent cash surplus in the banking system.
Data released by the apex bank at the close of business on Thursday showed that banks deposited about N6.96 trillion at the facility on Wednesday, March 11, before easing slightly to N6.69 trillion on March 12.
The trend reflects sustained liquidity inflows into the financial system, with banks opting to earn overnight interest from the CBN rather than expand lending immediately.
Figures from the CBN indicate a steady build-up of liquidity over recent days as lenders continued to park surplus funds at the deposit window.
Deposits at the SDF rose sharply from N5.20 trillion on March 9 and N5.27 trillion on March 10 to N6.96 trillion on March 11, before moderating slightly to N6.69 trillion on March 12.
The surge coincided with significant repayments of maturing government securities, which injected about N1.5 trillion into the banking system during the period.
Primary market repayments climbed to about N711.55 billion on March 12, up from N481.61 million on March 11 and N266.46 million on March 10.
These repayments typically represent maturing Treasury bills or Federal Government bonds returning principal to investors—mainly deposit money banks and institutional investors—thereby boosting liquidity in the financial system.
While these repayments injected liquidity, fresh government borrowing helped absorb part of the excess funds.
The CBN recorded primary market sales of about N933.92 billion on both March 11 and March 12, reflecting settlements from a recent Treasury bills or Federal Government bond auction.
The large issuance served as a liquidity mop-up measure, offsetting part of the cash released through maturing securities. Government borrowing through the primary market often complements other CBN liquidity management tools to maintain balance in the money market.
Despite these measures, the scale of deposits at the SDF indicates that liquidity conditions in the banking system remain elevated. Banks continued to park significant funds at the facility even after participating in government securities auctions.
Opening balances of banks with the CBN also declined gradually during the period, falling from N113.15 billion on March 10 to N93.40 billion on March 11, and further to N77.23 billion on March 12. This suggests that liquidity was being redeployed into government securities or absorbed through the deposit facility.
The CBN has intensified efforts to manage excess liquidity through a combination of monetary tools, including the Standing Deposit Facility (SDF), Open Market Operations (OMO), and Treasury bills auctions aimed at withdrawing surplus funds from circulation.
In January 2026 alone, the apex bank withdrew over N15 trillion from the banking system through OMO sales, Treasury bills issuances, and deposits at the SDF.
The liquidity withdrawal comprised N8.5 trillion from OMO sales, N3.7 trillion from primary market issuances, and N2.9 trillion placed at the deposit facility.
In February 2026, the CBN also sterilised another N3.57 trillion within three days as banks parked excess funds at the SDF window.
These moves reflect the central bank’s tightening stance as it seeks to contain persistent liquidity in the financial system.
Although banks continue to hold large volumes of idle cash at the SDF window, the CBN’s combined use of OMO, Treasury bills, and the deposit facility—offering an overnight interest rate of about 22.2 percent—remains central to its strategy of moderating inflationary pressure and stabilising short-term interest rates in the money market.
