BY NGOZI ONYEAKUSI

CBN Governor, Olayemi Cardoso

Banks and merchant banks’ deposits with the Central Bank of Nigeria (CBN),  has dropped by 28.4 per cent to N92.32 trillion in April 2026 as against N128.9 trillion in March 2026.

The development was as result of the reduction in the Monetary Policy Rate (MPR) to 26.50 per cent from 27 per cent by the Monetary Policy Committee (MPC) of the CBN.

The apex bank’s  financial data, detailed that banks and merchant banks’ deposits in February 2026 stood at  N61.11  trillion, a 16.18  per cent increase when compared to N52.6 trillion deposited in January 2026. Banks deposit excess cash with CBN using the Standing Deposit Facility (SDF) window as it comes with attractive interest overnight, making it a preferred option for banks to earn risk-free returns.

According   to analysts, the   decision by banks and merchant banks  to cut their deposits with the CBN can be attributed to the recent cut in the Monetary Policy Rate (MPR) to 26.50 per cent in February 2026 from 27 per cent 2025. Also, this was driven by the lower opportunity cost of holding cash with the CBN compared to lending it out in the market.