Nigeria’s deposit money banks (DMBs) have placed nearly N7 trillion in excess liquidity at the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF) as of March 12, 2026, suggesting a persistence of cash surplus in the banking system.
Data released by the apex bank at the close of business on Thursday, March 12, 2026, showed that banks deposited about N6.96 trillion at the facility on Wednesday, March 11, before easing slightly to N6.69 trillion on March 12.
The development reflects continued strong liquidity inflows into the financial system, with banks opting to earn overnight interest from the CBN rather than immediately expanding lending activities.
What the data is saying
Data from the CBN showed a steady build-up of liquidity in the banking system over the past few days as lenders continued to park surplus funds at the apex bank’s deposit facility.
- The SDF recorded deposits of N6.96 trillion on Wednesday, March 11 and N6.69 trillion on Thursday, March 12, 2026, reflecting a sharp increase from earlier levels recorded within the week.
- The figures marked a significant rise from N5.27 trillion recorded on Tuesday, March 10, and the N5.20 trillion deposited on March 9, pointing to a rapid build-up of liquidity within a short period.
- The surge in deposits coincided with substantial repayments of maturing government securities, which injected about N1.5 trillion into the banking system during the period.
Primary market repayments rose to about N711.55 billion on March 12, significantly higher than the N481.61 million recorded on March 11 and N266.46 million on March 10.
These repayments typically represent maturing Treasury bills or Federal Government bonds returning principal funds to investors, mainly deposit money banks and institutional investors, thereby boosting liquidity levels in the financial system.
More insights
While repayments from government securities injected liquidity into the financial system, fresh government borrowing helped absorb part of the surplus funds.
- The CBN recorded primary market sales of about N933.92 billion on both March 11 and March 12, reflecting settlements from a recent Treasury bill or Federal Government bond auction.
- The large issuance served as a liquidity mop-up strategy, helping to offset part of the cash released through maturing securities.
- Government borrowing through the primary market often works alongside other CBN liquidity management tools to maintain balance in the money market.
Despite these absorption efforts, the scale of deposits at the SDF indicates that liquidity conditions in the banking system remained elevated.
Banks continued to place substantial funds at the CBN deposit facility even after participating in government securities auctions.
Opening balances of banks with the CBN also showed a gradual decline during the period, falling from N113.15 billion on March 10 to N93.40 billion on March 11 and further to N77.23 billion on March 12, suggesting that liquidity was being redeployed into government securities or absorbed through the deposit facility.
What you should know
The CBN has been intensifying efforts to manage excess liquidity in the banking system through a combination of monetary tools. These include the Standing Deposit Facility (SDF), Open Market Operations (OMO), and Treasury bills auctions aimed at withdrawing surplus funds from circulation.
- In January 2026 alone, the CBN withdrew over N15 trillion from the banking system through Open Market Operations, Treasury bill issuances and deposits at the SDF.
- The liquidity drain included N8.5 trillion from OMO sales, N3.7 trillion from primary market issuances and N2.9 trillion placed at the deposit facility.
- In February 2026, the apex bank also sterilised another N3.57 trillion within three days as banks parked surplus funds at the SDF window.
These actions reflect the CBN’s tightening stance as it attempts to contain persistent liquidity in the financial system.
Although banks continue to hold large volumes of idle cash at the SDF window, the CBN’s combined use of OMO, Treasury bills, and the deposit facility with overnight interest rate of about 22.2%, remains central to its strategy of moderating inflationary pressure and stabilising short-term interest rates in the money market.
