The Central Bank of Nigeria (CBN) has introduced a suite of innovative liquidity management instruments tailored for non-interest financial institutions. These tools—comprising the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement (NNMRA), the Central Bank of Nigeria Non-Interest Asset Backed Securities (CNi-ABS), and the CBN Non-Interest Note (CNIN)—are designed to enhance liquidity management and deepen the country’s non-interest financial market. The announcement came through a circular dated May 23, 2025, issued by the Financial Markets Department of the CBN.
The NNMRA serves as a standardized framework for conducting repurchase (repo) transactions in compliance with non-interest banking principles. It is intended to instill confidence, provide clear guidelines, and facilitate broader participation in the market. According to the CBN, this framework ensures that all parties involved—including the central bank—understand their responsibilities, thereby creating a transparent and robust system for repo operations within the non-interest space.
Meanwhile, the CNi-ABS is a new instrument being auctioned by the CBN, backed by tangible assets and designed specifically to align with the ethical principles of non-interest finance. The bank emphasized that the instrument supports diversification and resilience in the financial sector while ensuring transparency through asset-backing. This tool gives non-interest banks a way to manage liquidity without violating Shariah principles.
The third instrument, the CNIN, represents an interest-free note offered through scheduled auctions. It functions as a short-term liquidity support tool, providing financial institutions with flexible, Shariah-compliant options to meet their funding needs. The CBN stated that this note complements existing tools while broadening the liquidity options available to eligible institutions.
To maintain the integrity of the new liquidity framework, the CBN has barred participants from using its discount window on days when CNIN or CNi-ABS auctions are held, in order to prevent arbitrage. The Bank reiterated its dedication to promoting an inclusive, resilient, and ethically sound financial system, pledging ongoing oversight and support for the evolving non-interest banking sector in Nigeria.
Source: Business day