SNOW TV NEWS DESK
Nigerian banks significantly reduced their reliance on the Central Bank of Nigeria’s (CBN) short-term liquidity management facilities in October 2026, with both deposits and borrowings from the apex bank recording sharp declines.
Data from the CBN’s financial records show that deposits made by banks through the Standing Deposit Facility (SDF) fell by 87 per cent month-on-month to N1.22 trillion in October, compared with N9.4 trillion recorded in September.
Similarly, banks’ borrowing from the apex bank through its Standing Lending Facility (SLF) dropped by 98 per cent to N15 billion from N920 billion in the preceding month.
The figures point to a significant shift in how financial institutions managed their liquidity during the review period, although the data alone does not establish the specific reasons behind the decline.
The CBN operates these facilities to help banks manage short-term cash surpluses and funding shortages within the financial system.
Through the SLF, banks can obtain emergency liquidity from the apex bank at an interest rate above the Monetary Policy Rate (MPR). The CBN also provides funds through its Repurchase (Repo) facility by purchasing banks’ securities with an agreement to resell them at a predetermined date and price.
On the other hand, the SDF allows banks with excess funds to deposit their surplus cash with the CBN and earn interest.
The sharp fall in SDF deposits suggests that banks placed considerably less excess cash with the apex bank in October. Meanwhile, the decline in SLF borrowings indicates that banks made significantly less use of the facility to meet their short-term funding needs.
The development comes after the CBN recently reduced the Monetary Policy Rate from 26.5 percent to 23 percent as part of its monetary policy adjustments.
Following the reduction, the SLF interest rate was lowered to 23.5 per cent from 27 per cent, representing 50 basis points above the MPR.
The SDF rate was also reduced to 20 per cent from 22 per cent, placing it 300 basis points below the benchmark interest rate.
These adjustments changed the financial incentives available to banks when deciding whether to keep excess funds with the CBN or seek additional liquidity from the apex bank.
With the returns on surplus deposits reduced and borrowing costs adjusted, banks may reassess how they allocate available funds, including deploying more resources into lending and other investment opportunities.
However, whether the declining deposits will translate into increased credit to businesses and households remains an important question, particularly as the banking sector continues to respond to changing monetary conditions.
“Sir Bartholomew White Ebe is a Lagos-based media personality, Music Artist, Producer, and a Relationship Coach and independent journalist. With over seven years of experience tracking political developments and cultural shifts in Nigeria, he specializes in local current affairs, grassroots politics, and community-driven reporting across Lagos State. As the founder and chief editor of Snow Multimedia Connect {SNOW TV}, he leads the editorial team to deliver verified, high-impact stories to digital audiences.”
Email: snowmediaconnect@gmail.com
