Nigerian Banks Withdraw N3.76 Trillion from CBN Facility

Nigerian banks withdrew N3.76 trillion from the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF) over 13 days, indicating a pursuit of better returns after the CBN cut interest rates. The balance decreased from N7.52 trillion on September 24 to N3.76 trillion by October 7.

On October 6, banks withdrew N941.85 billion, marking a significant drop. The Monetary Policy Committee (MPC) had reduced the Monetary Policy Rate (MPR) by 350 basis points to 23 percent on September 22, the largest cut since 2006.

Initially, deposits rose after the MPC meeting, peaking at N7.52 trillion on September 24, but subsequently fell as banks sought higher yields elsewhere. The CBN maintained its reserve requirements, with the Cash Reserve Ratio (CRR) remaining at 45 percent for commercial banks.

The fluctuations in deposits reflect banks' cautious approach following the interest rate adjustments and the maturity of Open Market Operations (OMO) bills.