The Central Bank of Nigeria (CBN) has launched three non-interest financial instruments to deepen Nigeria’s financial markets and improve liquidity management.
CBN unveiled the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement (NNMRA) as part of efforts to regulate repurchase (repo) transactions. This contractual agreement will set standards for non-interest banking operations and define responsibilities for all counterparties.
“The agreement aims to standardize and regulate repo transactions, establishing an internationally acceptable framework,” the CBN stated.
The CBN has introduced the Non-Interest Asset-Backed Securities (CNI-ABS), designed as a liquidity management tool backed by tangible assets. These securities align with non-interest finance principles to strengthen market participation.
“The introduction of CNI-ABS provides non-interest banks with a liquidity management instrument that supports the Bank’s financial objectives,” the statement read.
CBN Rolls Out Non-Interest Note for Liquidity Management
The Non-Interest Note (CNIN) was also introduced as an alternative interest-free loan between eligible financial participants and the CBN. It complements existing non-interest financial instruments through periodic auctions.
“The CNIN offers an additional liquidity management avenue for non-interest financial institutions,” the circular explained.
Eligible participants must integrate these instruments into their operations while ensuring compliance with regulatory frameworks. The CBN warned that participants cannot access the Bank’s discount window on CNI-ABS and CNIN auction days.
The CBN confirmed that it will continue monitoring market developments and issue further guidance as required.
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