Seven Nigerian banks have surged their restricted deposits with the Central Bank of Nigeria (CBN) to N18.82 trillion as of March 31, 2025, representing a significant increase from N17.54 trillion in December 2024. Access Holdings leads the pack with N8.64 trillion locked in, a 22.4% increase from N7.06 trillion in December 2024.
The Central Bank of Nigeria (CBN) mandates banks to set aside funds in three key categories: mandatory reserve deposits, special cash reserve requirements, and differentiated cash reserve schemes. This helps the CBN regulate the money supply, control inflation, and maintain monetary stability. Additionally, the Cash Reserve Ratio (CRR) obliges banks to hold a specific percentage of their total deposits as a reserve with the CBN, which is off-limits for lending and investment purposes.
The banks have reported varying changes in their restricted deposits. United Bank for Africa recorded N3.46 trillion in restricted deposits in March 2025, a decline of 12% from N3.93 trillion in December 2024, Guaranty Trust Holding Company saw a 10.6% increase to N2.17 trillion in March from N1.96 trillion in December 2024 while Fidelity Bank’s restricted deposits rose by 4.4% to N1.66 trillion in March 2025 from N1.59 trillion in December 2024.
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In the same vein, Stanbic IBTC’s cash reserve grew by 5.7 per cent to N758bn in March 2025 from N717bn in December 2024 while CBN holds these funds, making them unavailable for daily use.
FCMB Group saw a significant decline in its restricted deposits, decreasing them to N1.24 trillion in March 2025 from N1.44 trillion in December 2024, a drop of N198 billion or 13.7%, Wema Bank grew its restricted deposits to N892 billion in March 2025, a 6.3% increase from N839 billion in December 2024 while the balance includes N26bn under the DCRR scheme aimed at stimulating real-sector financing.
The Monetary Policy Committee of the CBN has maintained the Monetary Policy Rate at 27.50%, marking the second straight time it has kept the rate unchanged in 2025. CBN Governor Olayemi Cardoso stated that the decision allows members to assess short-term economic trends more effectively.
Economists have differing opinions on the impact of the high CRR on banks’ core function of financial intermediation. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, believes that the CRR affects banks’ lending capacity and hinders their primary role. Bismarck Rewane, CEO of Financial Derivatives Company Limited, argues that the high CRR is necessary to combat inflation, pointing to the CBN’s research showing a strong link between excess liquidity and rising inflation rates.
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