Seven of Nigeria’s top banks collectively reported a surge in restricted deposits with the Central Bank of Nigeria (CBN), reaching N18.82 trillion as of March 31, 2025—up from N17.54 trillion in December 2024. The reserves, classified under mandatory and special cash reserve requirements, are inaccessible for day-to-day banking operations and reflect the apex bank’s tightening grip on monetary policy.
Access Holdings led the group with N8.64 trillion locked away—an increase of 22.4 per cent from N7.06 trillion three months prior. These reserves, mandated under the Cash Reserve Ratio (CRR), represent the portion of bank deposits that must be held with the CBN and are used to manage liquidity and curb inflation.
Other banks also recorded changes:
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United Bank for Africa (UBA) saw a decline in restricted funds from N3.93tn to N3.46tn,
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Guaranty Trust Holding Company (GTCO) recorded an increase to N2.17tn,
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Fidelity Bank rose slightly to N1.66tn,
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Stanbic IBTC climbed to N758bn,
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Wema Bank increased to N892bn,
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FCMB Group posted a drop to N1.24tn.
These reserves include funds tied to special agreements such as the $5 million minimum balance with Afrexim Bank under a $300 million loan arrangement reported by Access Holdings.
Amid these developments, the CBN’s Monetary Policy Committee retained the Monetary Policy Rate (MPR) at 27.5 per cent, maintaining the Cash Reserve Ratio at 50 per cent for Deposit Money Banks and 16 per cent for Merchant Banks. The Liquidity Ratio also remained unchanged at 30 per cent.
The policy stance comes as Nigeria’s headline inflation eased to 23.71 per cent in April 2025 from 24.23 per cent in March, according to the National Bureau of Statistics.
Economic Reactions
Economists have expressed concern that the elevated CRR hampers the banks’ primary function—financial intermediation.
“The CRR and liquidity ratio combined mean banks can’t lend effectively. It’s squeezing credit and investment,” said Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise. “While some argue that monetary tightening controls inflation, I believe supply-side fiscal policies would be more effective.”
Bismarck Rewane, CEO of Financial Derivatives Company, offered a more cautious endorsement of the policy.
“Yes, the CRR is high, but it’s necessary to combat persistent inflation. The CBN is acting based on data. If inflation continues to drop, the CRR could be eased in coming quarters.”
With tight monetary tools still in place and restricted reserves swelling, banks face ongoing pressure on liquidity. Analysts warn that unless lending constraints ease, growth in the real sector may stall, despite moderate gains in inflation control.
As stakeholders await potential shifts in CBN policy, the banking sector remains caught between regulatory compliance and the challenge of supporting Nigeria’s investment-led recovery.
