Banks have increased their deposit with the Central Bank of Nigeria, CBN, by 907.3 percent Year-on-Year, YoY, to N68.9 trillion in the first half of the year (H1’25) from N6.84 trillion in the corresponding period of 2024 (H1’24), reflecting excess liquidity in the banking system.
CBN accepts deposits from banks through its Standing Deposit Facility (SDF) and pays an interest rate of MPR minus 100 bpts.
On the other hand, the apex bank has two short term lending windows for banks namely the Standing Lending Facility (SLF) and Repo lending.
It lends money to banks through the SLF at interest rate of 500 basis points (bpts) above the Monetary Policy Rate (MPR), and it also lends money to banks through Repurchase (Repo) arrangement, which involves the purchase of banks’ securities with the agreement to sell back at a specific date and usually for a higher price.
Breakdown of the deposits showed that banks deposited N19.22 trillion in the first quarter of 2025, Q1’25, representing 956 per cent, YoY from N1.82 trillion in Q1’24. Banks’ deposits in the SDF stood at N49.68 trillion in Q2’25 up by 889.6 per cent, YoY from N5.02 trillion in Q2’24.
