CBN defends 75% reserve requirement on public deposits

The Central Bank of Nigeria has defended its decision to impose a 75 per cent Cash Reserve Ratio on non-Treasury Single Account public sector deposits, describing the measure as part of efforts to manage liquidity and contain inflationary pressures in the economy.

The Director of the Stakeholder Engagement and Institutional Relations Department, Hakama Sidi-Ali, explained the policy during the CBN Listens Programme held in Ibadan, Oyo State, on Thursday.

The CBN introduced the 75 per cent Cash Reserve Ratio on non-Treasury Single Account public sector deposits at its 302nd Monetary Policy Committee meeting held on 22 and 23 September, 2025.

In a statement issued on Friday, the apex bank said Sidi Ali highlighted “the implementation of a 75 per cent Cash Reserve Ratio on non-Treasury Single Account public sector deposits as part of the Bank’s efforts to improve liquidity management and mitigate inflationary pressures in the economy.”

The CRR is the proportion of customer deposits that banks must keep with the central bank rather than deploy for lending or other activities.

The policy is intended to restrict excess liquidity in the banking system and strengthen the transmission of monetary policy, although it also limits the funds banks can deploy from the affected deposits.

Sidi-Ali said the CBN, under Governor Olayemi Cardoso, had continued implementing monetary and financial sector reforms aimed at restoring macroeconomic stability, strengthening financial markets and improving confidence in the economy.

She identified the unification of exchange rates and introduction of the Bloomberg BMatch trading system as measures designed to improve transparency and efficiency in foreign exchange transactions.

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The director also described the banking sector recapitalisation programme as a major milestone, saying it had strengthened banks’ capital adequacy, resilience and capacity to support economic growth.

Other initiatives highlighted included the Non-Resident Bank Verification Number, introduced to improve banking access for Nigerians in the diaspora, and the Nigeria Payments System Vision 2028.

She also cited the Nigerian Overnight Financing Rate, developed in collaboration with the Financial Markets Dealers Association, as a market-based benchmark for short-term funding transactions.

According to her, the benchmark is intended to improve transparency in the money market and align Nigeria’s financial infrastructure with international practices.

On financial inclusion, Sidi-Ali said the bank would continue working with financial institutions, fintech companies, mobile money operators, development partners and state governments to expand financial services to underserved communities.

She maintained that wider access to financial services was necessary to support entrepreneurship, reduce poverty and create economic opportunities.

Speaking on the engagement programme, she said sustained dialogue with stakeholders would help the bank address misconceptions about its policies and identify emerging challenges affecting businesses and households.

“The Central Bank of Nigeria values your diverse perspectives, experiences, concerns, and recommendations. Your contributions today will help shape future engagements and strengthen the effectiveness of our policy interventions,” she noted.