Nigerian Banks Park N3.7trn at CBN Amid Lending Caution

Commercial banks in Nigeria deposited a massive N3.67 trillion into the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF) on December 24, 2025, marking one of the largest liquidity surges in recent months.

Financial data from the CBN reveals a sharp spike in idle funds just before the Christmas holiday.

This increase occurred despite the apex bank’s earlier efforts to reduce liquidity, including a N1.7 trillion Open Market Operation (OMO) sale on December 22, highlighting the persistent excess cash within the banking system.

Records show that bank placements in the SDF rose sharply from N2.47 trillion on December 23 to N3.67 trillion on December 24—an increase of N1.2 trillion in a single day.

Banks’ opening balances with the CBN also grew from N163 billion to N223 billion, further indicating significant surplus liquidity.

Analysts interpret the trend as a sign of caution in the lending environment. With the SDF offering an overnight interest rate of about 22.5%, banks appear to prefer parking funds securely rather than expanding credit amid ongoing monetary tightening.

The data also suggests a shift in the CBN’s approach. After intense OMO activity between November and December—where over N11.2 trillion was raised and nearly N11.1 trillion repaid—the central bank now seems to be leaning toward passive liquidity management. By relying more on the SDF window instead of issuing new short-term debt, the CBN can maintain monetary tightening while reducing interest payment costs, which approached N2 trillion in recent auctions.

Looking ahead, observers expect the CBN to resume more aggressive OMO operations in early 2026 to help control inflation, support the foreign exchange market, and possibly address government financing needs.

The record SDF deposit underscores broader economic caution, reflecting limited lending appetite, uncertain investment opportunities, and banks’ preference for low-risk returns. For policymakers, it signals potential adjustments in liquidity management strategy as 2026 approaches.

Indeed, the Standing Deposit Facility(SDF) is used by the CBN to absorb excess bank liquidity by paying interest on overnight deposits. Its counterpart, the Standing Lending Facility (SLF), provides short-term funds to banks at higher rates.

Consequently, the recent surge in SDF usage points to high systemic liquidity coupled with weak credit expansion.

About The Author

Dele Fashomi

Dele Fashomi, seasoned journalist and communication teacher, is a holder of Master of Arts degree in Communication and Language Arts from the University of Ibadan in 1992/93.

Earlier, he had bagged a Bachelor degree from the same university in 1984, after which he proceeded to the Nigerian Institute of Journalism, Lagos, in 1990, for a postgraduate diploma in Journalism.

He had done many courses in communication, including the EU-BBC Editing Course in 2002.

Mr. Fashomi combines effectively the practice, research and teaching of communication. And to date, he has published two academic works in communication: Issues in Communication Technology and Policy (2010) and Economic and Social Issues in Advertising and PR (2013).

He had his first break in the Nigerian media in Concord Newspapers in 1990 and today, he has over two and half decades experience earned in several newspapers.

He has been part of many start-ups, such as The Republic (1987), The Comet (1999), The Anchor 2001 – 2002; Sun Newspapers (2003); Westerner newsmagazine (2005 – 2010) as Editor; National Life (2011) as Sunday Editor, and Newswatch Newspapers (2012- 2016) as Daily Editor.

Dele Fashomi is now the Publisher/Editor-in-Chief of Newstide247.com newspaper online, which he started in July 2015. He is also into biography writing, with many books in his trail, some of which he wrote alone and one he co- authored with his mentor, Mr Dare Babarinsa, entitled:  Olabiyi Durojaiye – DARE TO BE DiFFERENT. He also guided and collaborated with Pa Olatunji Odusanya in writing his autobiography – AGAINST ALL ODDS. There are many other books in the works under his pen.

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