Banks Deposit N7 Trillion Excess Cash with CBN

Nigeria’s deposit money banks have placed nearly ₦7 trillion in excess liquidity with the Central Bank of Nigeria through its Standing Deposit Facility, indicating persistent surplus liquidity within the banking system.

Data released by the apex bank showed that banks deposited about ₦6.96 trillion at the facility before easing slightly to ₦6.69 trillion within a day.

The development reflects strong liquidity inflows into the financial system, with banks opting to earn overnight interest from the CBN rather than expand lending immediately.

Figures from the central bank indicated a steady build-up of liquidity in the banking system over several days as lenders continued to place surplus funds at the deposit facility.

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Deposits at the facility rose significantly from earlier levels recorded during the week, increasing from about ₦5.27 trillion to nearly ₦7 trillion within a short period.

The liquidity surge coincided with large repayments of maturing government securities, which injected about ₦1.5 trillion into the banking system.

Primary market repayments rose sharply, contributing to the increase in available liquidity within the financial system.

These repayments typically represent maturing Treasury bills or Federal Government bonds returning principal funds to investors, mainly banks and institutional investors.

While repayments boosted liquidity, fresh government borrowing helped absorb part of the excess funds.

The CBN recorded primary market sales of about ₦933.92 billion through government securities, reflecting settlements from recent Treasury bill or bond auctions.

Such issuances serve as a liquidity management tool, helping authorities to moderate excess cash within the money market.

Despite these absorption measures, the level of deposits at the Standing Deposit Facility suggests that liquidity conditions in the banking sector remain elevated.

Opening balances of banks with the central bank also showed a gradual decline, indicating that part of the available funds was redeployed into government securities or parked at the deposit facility.