The Central Bank of Nigeria (CBN) has introduced innovative liquidity management instruments tailored specifically for non-interest financial institutions to strengthen Nigeria’s non-interest financial market.
Announced through a circular dated May 23, 2025, the new instruments include the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement (NNMRA), the CBN Non-Interest Asset Backed Securities (CNi-ABS), and the CBN Non-Interest Note (CNIN). These tools aim to improve market structure, liquidity management, and compliance with non-interest finance principles.
The NNMRA establishes a standardized contractual framework for repurchase (repo) transactions within the non-interest banking sector. It sets clear guidelines and responsibilities for all parties involved, including the CBN, to build confidence and encourage wider participation in non-interest repo operations.
The CNi-ABS is an asset-backed security designed according to non-interest finance principles. By being backed with tangible assets, it provides non-interest banks with effective liquidity management options without violating their operational ethics. The CBN has already commenced auctions of this instrument, marking a key step in diversifying and strengthening the non-interest financial market.
The CNIN is an interest-free note that offers short-term liquidity support through scheduled auctions. It complements existing non-interest financial products, enhancing flexibility and access for eligible institutions seeking liquidity solutions.
The CBN directed all non-interest banks, conventional banks with non-interest windows, and authorized dealers to integrate these instruments into their operations. On auction days for the CNi-ABS and CNIN, access to the CBN’s discount window will be suspended to maintain the integrity of liquidity management and avoid arbitrage.
Market participants are encouraged to consult the “Revised Guidelines for the Operation of Non-Interest Financial Institutions’ Instruments by the Central Bank of Nigeria, 2022” for detailed regulatory expectations and operational procedures.
The Central Bank reaffirmed its commitment to fostering a vibrant, inclusive, and ethically sound financial system, emphasizing that these new tools are vital for enhancing participation and deepening the non-interest financial sector’s effectiveness in Nigeria.
