CBN’s general requirements for operations of non-interest financial institutions out

THE Central Bank of Nigeria (CBN) has released the general requirements and terms of operations of the non-interest-bearing financial instruments, in addition to the specific provisions or features of each instrument.

The was made known in a guideline available on CBN’s website on Friday, just as the apex bank noted that the features were as specified therein or as might be reviewed by the Bank from time to time.

It urges participants to note the provisions in the individual instruments alongside these general requirements:

According to the requirements, only licensed non-interest banks (NIBs), deposit money banks with non-interest banking window and any other authorised dealer as may be approved by the CBN shall be eligible to participate at the window, which shall be voluntary.

“Interested participant(s) in the non-interest-bearing instruments shall apply for admission into the window. Two (2) representatives of the authorised institution shall be required to initiate and consummate transactions on behalf of the institution.

“The institutions shall provide the details of their representatives who have been authorised to initiate and conduct business in the instruments on their behalf. These shall include passport photograph, name, position held in institution, specimen signature, contact telephone number and any other information that may be required from time to time by the Bank.

“The Bank shall, at its discretion, apply charges in the operation of these instruments, except in certain circumstances as may be determined by the Bank from time to time. The Bank, in the course of operation of the instruments shall make appropriate announcement(s) to participating institutions through media, which shall include but not be limited to Reuters Information System, Bloomberg, facsimile, telephone, electronic mail and circular.

“The Bank shall not be responsible for, among other things, technical or any other failures that may prevent a participating institution from receiving an announcement, participating in an operation, errors or omissions arising from mandate on transaction deals, except for its own delays and / or errors or omissions,” the guideline read in part.

CBN further noted that participating institutions shall be allowed to place their funds during the working day, within a period that is in line with the CBN discount window operating hours. The tenor for the placement of surplus funds shall be on overnight, three-day and seven-day basis, subject to rollover on maturity for the same term, either by the participating institution or the Bank, it clarified.

The licensing of Non-Interest Financial Institutions (NIFIs) by the CBN to complement the existing conventional banking system has, no doubt, expanded the scope and diversity of banking services in the Nigerian financial system it further clarified.

The aim of this development is to attend to the growing need for innovative financial services, enhancement of financial inclusion, and acceleration of economic activities, growth and development. Towards realising the full potentials of the NIFIs and non-interest-bearing financial operations, the Bank has developed a number of non-interest bearing instruments to be accessed at its (CBN) window by the NIFIs in order to facilitate liquidity management, assist in effective monetary policy implementation and deepen the financial system.

In December 2012, the following liquidity management instruments were introduced: CBN Safe Custody (Wadiah) Account (CSCA) ; CBN Non-Interest Note (CNIN); CBN Non-Interest Asset-Backed Securities (CNI-ABS).

Furthermore, in August 2017, the Bank introduced two lender of last resort instruments to be accessed at its window by NIFIs, namely:  Intra-day Facility (IDF) ; Funding for Liquidity Facility (FfLF),

It further stated that the determination of any return, reward or gift for any account or funds placed or deposited by any participating institution may include, but not be limited to, an assessment of any or combination of the following factors: the prevailing monetary policy stance; the prevailing liquidity conditions in the banking system; Market Support Committee (MSC) decisions and advisory among others.