CBN defends 75% cash reserve requirement on public sector deposits

By Emmanuella Opara | October 25th 2026

KEY POINTS

• The Central Bank of Nigeria defends the 75 per cent Cash Reserve Ratio on non-Treasury Single Account public sector deposits.
• The policy is intended to manage banking system liquidity and curb inflationary pressures.
• The apex bank highlights foreign exchange reforms, bank recapitalisation and financial inclusion initiatives.
• The CBN says stakeholder engagement will help address concerns about its policies.

MAIN STORY

The Central Bank of Nigeria (CBN) has defended its 75 per cent Cash Reserve Ratio (CRR) on non-Treasury Single Account public sector deposits, saying the measure is intended to improve liquidity management and contain inflationary pressures.

The Director of the CBN’s Stakeholder Engagement and Institutional Relations Department, Hakama Sidi-Ali, explained the policy during the bank’s CBN Listens Programme held in Ibadan, Oyo State, on Thursday.

The apex bank introduced the requirement at its 302nd Monetary Policy Committee meeting held on September 22 and 23, 2025.

The CRR represents the proportion of deposits banks are required to keep with the central bank rather than use for lending and other activities. The 75 per cent requirement on the affected public sector deposits is intended to restrict excess liquidity in the banking system and strengthen the transmission of monetary policy, although it limits the funds banks can deploy from those deposits.

Sidi-Ali said the CBN, under Governor Olayemi Cardoso, had continued to implement monetary and financial sector reforms aimed at restoring macroeconomic stability, strengthening financial markets and improving confidence in the economy.

She identified the unification of exchange rates and the introduction of the Bloomberg BMatch trading system as measures designed to improve transparency and efficiency in foreign exchange transactions.

The CBN director also described the banking sector recapitalisation programme as a major milestone, saying it had strengthened banks’ capital adequacy, resilience and capacity to support economic growth.

Other initiatives highlighted included the Non-Resident Bank Verification Number, which was introduced to improve banking access for Nigerians in the diaspora, and the Nigeria Payments System Vision 2028.

She also cited the Nigerian Overnight Financing Rate, developed in collaboration with the Financial Markets Dealers Association, as a market-based benchmark for short-term funding transactions. According to her, the benchmark is intended to improve transparency in the money market and align Nigeria’s financial infrastructure with international practices.

On financial inclusion, Sidi-Ali said the CBN would continue working with financial institutions, fintech companies, mobile money operators, development partners and state governments to expand access to financial services in underserved communities.

She said broader access to financial services was necessary to support entrepreneurship, reduce poverty and create economic opportunities.

Sidi-Ali added that continued engagement with stakeholders would help the bank address misconceptions about its policies and identify emerging challenges affecting businesses and households.

“The Central Bank of Nigeria values your diverse perspectives, experiences, concerns, and recommendations. Your contributions today will help shape future engagements and strengthen the effectiveness of our policy interventions,” she said.

THE ISSUES

The 75 per cent CRR requirement restricts the proportion of affected public sector deposits that banks can deploy for lending and other activities. The CBN says the measure supports liquidity management and efforts to contain inflation.

The policy also highlights the balance monetary authorities must maintain between controlling excess liquidity and ensuring banks have funds available to support economic activity.

WHAT’S BEING SAID

“The Central Bank of Nigeria values your diverse perspectives, experiences, concerns, and recommendations. Your contributions today will help shape future engagements and strengthen the effectiveness of our policy interventions,” Hakama Sidi-Ali, Director of the CBN’s Stakeholder Engagement and Institutional Relations Department, said.

WHAT’S NEXT

The CBN says it will continue engaging financial institutions, businesses, government representatives and other stakeholders as it implements monetary and financial sector reforms. The bank also plans to sustain efforts to expand financial inclusion and improve access to banking services in underserved communities.

BOTTOM LINE

The CBN maintains that the 75 per cent cash reserve requirement on non-Treasury Single Account public sector deposits is necessary for liquidity management and inflation control, alongside wider reforms intended to strengthen Nigeria’s financial system.