CBN Takes Steps To Deepen Non-Interest Banking

The Central Bank of Nigeria (CBN) has taken bold moves aimed at deepening the non-interest banking in Nigeria.

This involves the Deployment of the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement, Commencement of Auction of the CBN Non-Interest Asset-Backed Securities (CNI-ABS)
and the Commencement of Auction of the CBN Non-Interest Note (CNIN).

These were disclosed in the apex bank circular to all Non-Interest Banks, Conventional Banks with Non-Interest Banking Window and Authorized dealers.The circular referenced FMD/DIR/PUB/CIR/001/028 and dated May 23, 2025, was signed by the Ag. Director, Financial Markets Department, Okey Umeano.

CBN explained that the new steps being taken was informed by the need of “ongoing effort to develop the non-interest financial markets, and in a bid to enhance the adoption and effective utilization of the Bank’s non-interest financial instruments, strengthen market participation and further deepen the non-interest financial markets”.

According to the apex bank, in respect of Master Purchase Agreement, “This Contractual Agreement aims to standardize and regulate the conduct of repurchase (repo) transactions in the Non-Interest Banking sector, establish an internationally acceptable guide and define responsibilities for counterparties including the Central Bank of Nigeria.

“The CNI-ABS is a liquidity management instrument backed by tangible underlying assets and structured in accordance with non-interest finance principles. The introduction of CNI-ABS aims to provide the non-interest banks with a non-interest financial instrument which supports the Bank’s liquidity management objectives.

“The CNIN is another non-interest financial instrument developed by the Bank evidencing an interest free loan between the eligible participants and the Bank. It complements the existing non-interest financial instruments by providing an additional avenue for liquidity management through periodic auctions.”

The CBN advised that in view of these developments, all eligible and authorized participants are required to take necessary measures to integrate these instruments into their operations and ensure compliance with extant guidelines, circulars and relevant regulatory frameworks.

It however said that participants are not allowed to access the Banks discount window on CNI-ABS and CNIN auction days, adding that it will
continue to monitor market developments and provide further guidance as may be necessary.