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Bank deposits dropped by N210bn in Q1 – CBN 

THE total amount of demand deposits dropped by N210bn between January and March 2023.

Data from the Central Bank of Nigeria showed that demand deposits dropped from N20.12tn in January 2023 to N19.91tn by March.

According to the Corporate Finance Institute, “A demand deposit is money deposited into a bank account with funds that can be withdrawn on-demand at any time.”

It noted that the depositor would typically use demand deposit funds to pay everyday expenses.

The Corporate Finance Institute further noted that many people would make large withdrawals from the bank during a financial crisis.

It added, “The withdrawals will lead to a decline in demand deposits and a decrease in the money supply, with banks left with less money to loan out.”

The large withdrawal was triggered by the naira redesign policy of the CBN, which led to cash scarcity, in the country.

The policy seemed to have led to a lack of trust in the banking system, with Nigerians making large withdrawals and hoarding cash.

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Naija Times