In October 2025, banks in Nigeria placed a staggering N64.55 trillion in deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF), marking a new high. This figure represents a remarkable increase of roughly 27.2 per cent compared to the N50.73 trillion recorded in September.
Under the SDF, banks deposit forward-looking cash reserves with the CBN rather than deploying them in the wider economy. At the same time, banks borrowed modest amounts from the CBN’s Standing Lending Facility (SLF), which carries a higher interest rate.
Data for the year up to October 2025 show that banks deposited approximately N210.74 trillion with the central bank. This is an increase of nearly 695 per cent compared with the N26.52 trillion deposited over the same period in 2024.
Analysts attribute the surge in deposits to a mix of abundant liquidity in the banking system and reluctance to lend. According to one observer: banks prefer “the relative safety of the SDF … rather than extending credit into uncertain territory.”
Several factors underpin this cautious stance: persistent inflation, exchange-rate volatility, low consumer demand, elevated credit risk, and security concerns all push banks toward safe-haven placements rather than loan growth.
The SDF is also more attractive because the rate offered by the CBN is quite generous, essentially the Monetary Policy Rate (MPR) minus 100 basis points. With the MPR at about 27 per cent, the SDF return is about 26 per cent.
This dynamic is noteworthy: while system-wide liquidity is high (banks have more cash than they appear willing to lend), credit to the private sector remains relatively flat. For example, as of September 2025, private-sector credit stood at N72.53 trillion, down from N75.88 trillion in August.
In short: deposit-rich banks are parking money with the CBN rather than pushing it out into the real economy.
The surge in bank deposits with the CBN signals excess liquidity and muted lending in Nigeria’s economy. Rather than financing businesses or consumers, banks are favouring risk-free placements, which may slow economic growth and investment even as money supply swells, thereby, potentially complicating inflation control and monetary-policy effectiveness.
