KEY POINTS

• Banks’ deposits with the Central Bank of Nigeria through the Standing Deposit Facility fell by 87 per cent to ₦1.22 trillion in October 2026.
• Their borrowing from the apex bank also declined by 98 per cent to ₦15 billion.
• Capital market expert Uche Uwaleke says banks may have deployed more funds into lending, government securities and other investments.
• He cautions that lower deposits at the CBN do not automatically mean increased lending to productive sectors.

MAIN STORY

Banks’ deposits with the Central Bank of Nigeria (CBN) fell sharply in October 2026, with a capital market expert, Prof. Uche Uwaleke, suggesting that lenders may have deployed more of their available funds into credit and other financial market investments.

Uwaleke, President of the Capital Market Academics of Nigeria, made the observation in an interview with the News Agency of Nigeria (NAN) in Abuja on Sunday.

Reports citing CBN financial data showed that banks’ deposits with the apex bank through its Standing Deposit Facility (SDF) fell by 87 per cent month-on-month to ₦1.22 trillion in October from ₦9.4 trillion in September.

Banks’ borrowing from the CBN through the Standing Lending Facility (SLF) also dropped by 98 per cent to ₦15 billion in October, compared with ₦920 billion in the preceding month.

Uwaleke said the fall in SDF deposits suggested that banks had significantly less surplus liquidity to place with the CBN in October than they did in September.

He said the funds may have been redirected towards government securities, other financial market activities and lending, rather than remaining with the apex bank.

THE ISSUES

Uwaleke identified several possible explanations for the decline in banks’ deposits, including increased liquidity absorption by the CBN through monetary policy operations, changes in government cash flows and stronger demand for credit.

He also pointed to adjustments in banks’ liquidity management strategies and the effect of prevailing monetary policy conditions.

According to him, the reduction could indicate that banks were managing their liquidity positions more efficiently and relying less on the CBN’s standing facilities.

However, he cautioned against interpreting the figures as proof that more money was reaching businesses and other productive sectors of the economy.

The critical question, he said, was whether banks were using their available funds to expand private sector credit, support businesses and create jobs.

This distinction matters because a decline in deposits at the CBN does not, by itself, establish where the money has gone or whether it has translated into increased lending.

WHAT’S BEING SAID

“While the development is encouraging, its real significance will depend on how it translates into improved economic activities nationwide.” – Prof. Uche Uwaleke, President, Capital Market Academics of Nigeria.

“The decline could indicate improved liquidity management, better distribution of liquidity within the banking system and reduced funding pressures on banks.” – Prof. Uche Uwaleke.

WHAT’S NEXT

Uwaleke described the 98 per cent decline in banks’ borrowing through the SLF as another encouraging development, saying it suggested that lenders had less need to approach the CBN for emergency or overnight liquidity support in October.

He said the development could reflect improved liquidity management, better distribution of funds among banks and reduced funding pressures.

However, the extent to which these changes benefit the wider economy will depend on how banks deploy their available funds and whether businesses gain greater access to credit.

BOTTOM LINE

The sharp fall in banks’ deposits and borrowing at the CBN points to a change in liquidity conditions within the banking system. But the figures alone do not establish that lending has increased. The more important measure will be whether banks are financing businesses, productive investments and economic activity.