How CBN Reserve Rules Affect Bank Loans, Businesses and Prices

I explain how the Central Bank of Nigeria’s rules on bank reserves can affect lending, business activity and the prices Nigerians pay. At its September 2026 meeting, the CBN retained the Cash Reserve Requirement at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for qualifying non-Treasury Single Account public-sector deposits. Banks must keep the required share of qualifying deposits as reserves, which limits the funds available for lending and investment. The CBN also uses Open Market Operations to absorb or add liquidity by selling or buying eligible securities. These tools can help restrain inflation, but tighter lending conditions may also make it harder or more expensive for businesses and individuals to borrow. I look at how that balance can affect business expansion, jobs, household budgets and purchasing power. Monetary policy is only one influence on prices. Food supply, transport costs, energy prices and exchange-rate movements also matter, and lower inflation does not necessarily mean prices will fall; it means they are rising more slowly.

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