Following the reduction in the Monetary Policy Rate (MPR) to 26.50 per cent from 27 per cent by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), banks and merchant banks’ deposits with the CBN dropped by 28.4 per cent to N92.32 trillion in April 2026 as against N128.9 trillion in March 2026.
According to the CBN financial data, banks and merchant banks’ deposits in February 2026 stood at N61.11 trillion, a 16.18 per cent increase when compared to N52.6 trillion deposited in January 2026.
Banks deposit excess cash with CBN using the Standing Deposit Facility (SDF) window as it comes with attractive interest overnight, making it a preferred option for banks to earn risk-free returns.
According to analysts, the decision by banks and merchant banks to cut their deposits with the CBN can be attributed to the recent cut in the Monetary Policy Rate (MPR) to 26.50 per cent in February 2026 from 27 per cent 2025.
Also, this was driven by the lower opportunity cost of holding cash with the CBN compared to lending it out in the market.
