The Central Bank of Nigeria has defended its decision to require banks to hold 75 per cent of non-Treasury Single Account public sector deposits as cash reserves, saying the measure is necessary to manage liquidity and contain inflationary pressures. The CBN introduced the Cash Reserve Ratio at its monetary policy committee meeting on 22 and 23 September 2025. Hakama Sidi-Ali, the CBN's Director of Stakeholder Engagement and Institutional Relations, explained the policy during the CBN Listens Programme in Ibadan, Oyo State, on Thursday.
The cash reserve requirement is the proportion of customer deposits that banks must hold with the central bank rather than lend out or use for other activities. By restricting excess liquidity in the banking system, the CBN said the policy strengthens how monetary policy works, although it also limits the funds banks can deploy from the affected deposits.
Sidi-Ali said the CBN under Governor Cardoso had continued implementing monetary and financial sector reforms aimed at restoring macroeconomic stability and strengthening financial markets. These include the unification of exchange rates and introduction of the Bloomberg BMatch trading system to improve transparency and efficiency in foreign exchange transactions. The banking sector recapitalisation programme, described as a major milestone, had strengthened banks' capital adequacy, resilience and capacity to support economic growth.
Other initiatives highlighted included the Non-Resident Bank Verification Number for Nigerians in the diaspora, the Nigeria Payments System Vision 2028, and the Nigerian Overnight Financing Rate developed with the Financial Markets Dealers Association as a market-based benchmark for short-term funding. Sidi-Ali said the benchmark was intended to improve transparency in the money market and align Nigeria's financial infrastructure with international practices.
On financial inclusion, the CBN said it would continue working with financial institutions, fintech companies, mobile money operators, development partners and state governments to expand financial services to underserved communities. Sidi-Ali said wider access to financial services was necessary to support entrepreneurship, reduce poverty and create economic opportunities. She added that sustained dialogue with stakeholders would help the bank address misconceptions about its policies and identify emerging challenges affecting businesses and households.
For borrowers and savers, the 75 per cent reserve requirement means banks have less money available to lend from affected public deposits and less scope to offer attractive rates on those funds, potentially reducing credit availability and returns on certain deposit accounts.