Banks Park N83.95tn with CBN as Borrowing Drops 82% Amid Tight Monetary Policy

Nigerian banks significantly increased the amount of money deposited with the Central Bank of Nigeria (CBN) in July 2026, reflecting stronger liquidity across the banking sector and a reduced need to borrow from the apex bank.

The latest financial data released by the CBN showed that deposits in the Standing Deposit Facility (SDF) surged by 670.2 per cent year-on-year to ₦83.95 trillion in July 2026, up from ₦10.9 trillion recorded in the same month last year.

In contrast, banks’ borrowing through the Standing Lending Facility (SLF) fell sharply by 82 per cent, dropping to ₦1.19 trillion from ₦6.63 trillion in July 2025.

The Standing Deposit Facility allows commercial banks to place excess funds with the Central Bank, while the Standing Lending Facility and repurchase (Repo) arrangements provide short-term funding to financial institutions that require additional liquidity.

Under the current framework, the CBN lends through the SLF at an interest rate that is 500 basis points above the Monetary Policy Rate (MPR). Repo transactions also enable banks to obtain short-term funding by selling securities to the apex bank with an agreement to repurchase them at a later date.

The sharp increase in deposits, alongside the significant decline in borrowing, suggests that banks had ample cash reserves during the period, reducing their reliance on emergency funding from the Central Bank.

The development comes shortly after the Monetary Policy Committee (MPC) retained the Monetary Policy Rate (MPR) at 26.5 per cent, while keeping other key monetary policy tools unchanged. The CBN also maintained the asymmetric corridor around the MPR at +500/-450 basis points, the Cash Reserve Ratio (CRR) for commercial banks at 45 per cent, 16 per cent for merchant banks, and 75 per cent on non-Treasury Single Account (Non-TSA) public sector deposits.

Financial analysts say the CBN’s decision to maintain these policy measures underscores its commitment to tightening monetary conditions in a bid to curb inflation and stabilise the economy.

The latest figures indicate that while liquidity within the banking system has improved, the Central Bank remains focused on sustaining its inflation-control strategy through a cautious monetary policy stance.