Seven Nigerian banks have reported a combined total of N18.82 trillion in restricted deposits with the Central Bank of Nigeria (CBN) as of March 31, 2025—up from N17.54 trillion in December 2024. Access Holdings led the group with N8.64 trillion, marking a 22.4% increase from N7.06 trillion recorded three months earlier.
These funds, categorized under mandatory reserve deposits, special cash reserve requirements, and differentiated cash reserve schemes, are held by the CBN and are not accessible for daily banking operations. They serve as regulatory tools for controlling money supply, curbing inflation, and maintaining monetary stability. The Cash Reserve Ratio (CRR) mandates banks to keep a percentage of their deposits with the apex bank without the option of deployment for lending or investment.
Access Holdings posted the highest restricted funds at N8.64 trillion in March 2025. The bank clarified that this figure includes restricted deposits with institutions like Afrexim, where a $5 million minimum balance is required for the duration of a $300 million loan facility.
United Bank for Africa (UBA) recorded a decline in restricted funds, reporting N3.46 trillion in March 2025, down 12% from N3.93 trillion in December 2024.
Guaranty Trust Holding Company (GTCO) saw an increase of N208 billion, rising to N2.17 trillion from N1.96 trillion, citing compliance with CBN reserve mandates.
Fidelity Bank’s restricted deposits rose by 4.4% to N1.66 trillion, with N1.36 trillion classified as mandatory reserves and N221 billion under the special cash reserve.
Stanbic IBTC posted N758 billion in restricted reserves, a 5.7% increase from N717 billion.
Wema Bank reported N892 billion in March 2025, up from N839 billion. This includes N26 billion under the Differentiated Cash Reserve Requirement (DCRR) scheme aimed at real-sector financing.
FCMB Group was the only bank among the seven to record a decline, with its restricted deposits falling by 13.7% to N1.24 trillion from N1.44 trillion.
Meanwhile, the CBN has retained the Monetary Policy Rate (MPR) at 27.50% for the second consecutive time in 2025. Governor Olayemi Cardoso explained that the decision provides time to monitor macroeconomic trends. Other key policy measures include maintaining the asymmetric corridor at +500/-100 basis points, the CRR at 50% for Deposit Money Banks and 16% for Merchant Banks, and the Liquidity Ratio at 30%.
Data from the National Bureau of Statistics showed headline inflation eased to 23.71% in April 2025 from 24.23% in March, prompting discussions around the impact of monetary policy on bank lending.
Economic Perspectives
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, criticised the high CRR, saying it hampers banks’ ability to function effectively as financial intermediaries.
“Banks’ core function is to channel funds to productive sectors, but with a 50% CRR and 30% liquidity ratio—together accounting for 80% of their funds—there is little room left for lending,” he said. He also noted that the current monetary stance is detrimental to investment and economic growth.
Yusuf advocated for more fiscal measures, especially on the supply side, to address inflation: “Monetary tightening has its merits, but it won’t resolve inflation alone. We need strong fiscal interventions.”
Offering a counterpoint, Bismarck Rewane, CEO of Financial Derivatives Company, defended the CBN’s strategy, noting the direct link between excess liquidity and inflation.
“The CBN has acted appropriately. While the CRR is high, it is a necessary response to persistent inflation. As inflation begins to ease, we can expect a downward review of the CRR and MPR in the coming quarters,” Rewane explained.
Both experts acknowledged that Nigeria's inflation is being driven by low output and high demand, reinforcing the need for balanced policy interventions to restore macroeconomic stability.
ADEOLA KUNLE
