Commercial and merchant banks in Nigeria sharply reduced their deposits with the Central Bank of Nigeria (CBN) through the Standing Deposit Facility (SDF) by 87 per cent month-on-month to N1.22 trillion in October 2026, down from N9.4 trillion recorded in September 2026.
The dramatic drop in SDF usage was revealed in official financial performance data released by the apex bank on Wednesday, November 4, 2026, during a financial media briefing held at the CBN Headquarters in Abuja. A closer look at the apex bank’s monthly financial report reveals a parallel contraction across both of its key liquidity management windows.
While surplus funds deposited via the Standing Deposit Facility plunged by 87 per cent from N9.40 trillion in September to N1.22 trillion in October, short-term borrowings through the Standing Lending Facility (SLF) experienced an even steeper decline. Commercial banks borrowed just N15 billion from the SLF window in October 2026, marking a 98 per cent drop compared to the N920 billion recorded in the previous month.
Addressing capital market analysts and financial journalists in the press room at the CBN Headquarters on Wednesday, CBN Director of Corporate Communications, Hakama Sidi Ali, explained that the significant contraction across both deposit and lending operations highlights a broad recalibration in interbank liquidity management.
She noted that the notable contraction in both SDF placements and SLF borrowing reflects a significant reduction in commercial banks’ reliance on the apex bank’s daily liquidity management windows during the review period. She added that this shift highlights broader adjustments in system liquidity following aggressive Open Market Operations (OMO) and treasury bill issuances throughout October.
Financial market analysts have similarly attributed the steep decline in daily overnight placements to heavy liquidity absorption by the monetary authority through primary market debt instruments and OMO auctions, which effectively redirected excess capital into higher-yielding, medium-term securities.
