(DDM) – Deposits made by Nigerian banks with the Central Bank of Nigeria (CBN) have skyrocketed by 568 percent in just nine months, reaching an unprecedented ₦146.13 trillion, signaling a significant rise in excess liquidity within the banking system.
Diaspora Digital Media (DDM) gathered that the surge was recorded under the apex bank’s Standing Deposit Facility (SDF), where commercial banks park their idle funds to earn interest rather than lend them to customers or other financial institutions.
According to the latest CBN data, deposits under the SDF hit ₦50.73 trillion in September 2025 alone, a record-breaking monthly figure that analysts say reflects tightening monetary conditions and banks’ cautious lending behavior.
At the same time, borrowings by banks from the Standing Lending Facility (SLF) dropped by 12.4 percent to ₦69.37 trillion, indicating a reduced appetite for short-term interbank borrowing and a preference for liquidity preservation.
Diaspora Digital Media (DDM) learned that this development comes as the CBN intensifies its monetary tightening campaign through Open Market Operations (OMO) sales, aimed at absorbing excess liquidity and stabilizing the naira amid inflationary pressures.
In the last quarter, the central bank reportedly sold ₦15.23 trillion worth of OMO bills, a strategy designed to control money supply and curb speculative activities in the foreign exchange market.
Economists told DDM that while the surge in deposits suggests that banks are flush with cash, it also reveals a deeper structural concern, the reluctance of financial institutions to extend credit to the private sector, particularly small and medium-scale enterprises (SMEs).
They noted that high interest rates and policy uncertainty have discouraged risk-taking, pushing banks to prefer the safety of central bank deposits over lending to productive sectors.
Financial analyst, Bode Akinyemi, explained that the CBN’s recent monetary stance aims to absorb excess liquidity and combat inflation, but it could also slow down credit expansion if not carefully balanced.
He said, “The rise in deposits means banks have money but are not lending it out. This shows a cautious outlook, possibly due to regulatory constraints and high borrowing costs in the economy.”
The CBN has repeatedly defended its tightening measures as necessary to maintain price stability, safeguard the naira, and restore investor confidence in Nigeria’s financial markets.
Diaspora Digital Media (DDM) reports that the surge in OMO sales also indicates renewed activity in Nigeria’s fixed-income market, with institutional investors taking advantage of higher yields offered by the central bank’s instruments.
Analysts, however, warn that sustained liquidity absorption without a corresponding boost in credit creation could dampen economic recovery and delay private-sector expansion.
They advise the CBN to complement its tightening policies with targeted interventions that support lending to strategic sectors such as agriculture, manufacturing, and energy, where credit gaps remain wide.
As the year’s final quarter unfolds, stakeholders continue to monitor how the apex bank will balance liquidity management with growth stimulation, ensuring that monetary discipline does not choke productive investment.
With ₦146 trillion now sitting idle in CBN vaults, the challenge before policymakers is clear, to channel liquidity back into the real economy without reigniting inflation.