CBN Unveils 3 Liquidity Instruments To Boost Non-interest Financial Institutions

The Central Bank of Nigeria (CBN) has introduced new liquidity management instruments targeted at Non-Interest Financial Institutions (NIFIs), in a move aimed at deepening financial inclusion and enhancing the stability of the non-interest banking segment of the financial system.

The apex bank announced the deployment of the liquidity management tools to address short-term liquidity challenges without compromising the principles of non-interest banking.

According to a circular issued and signed by the acting director, Financial Markets Department, Okey Umeano, dated May 23, 2025, the CBN said, the instruments will operate in line with the ethical tenets of non-interest finance and are backed by eligible collateral instruments to mitigate risks.

The CBN said, the introduction of these instruments reflects its ongoing commitment to inclusive financial system development and efforts to ensure that all segments of the banking industry, including those operating under non-interest principles, have adequate tools to manage liquidity.

Among the instruments is the Deployment of the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement which 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 CBN.

The policy will also see the apex bank commence the auction of the CBN Non-Interest Asset-Backed Securities (CNI-ABS) which is a liquidity management instrument backed by tangible underlying assets and structured in accordance with non-interest finance principles.

According to the circular, the CNI-ABS aims to provide the non-interest banks with a non-interest financial instrument which supports the Bank’s liquidity management objectives. It will also commence the auction of the CBN Non-Interest Note (CNIN), another non-interest financial instrument developed by the Bank evidencing an interest free loan between the eligible participants and the Bank.

The CNIN is meant to complement the existing non-interest financial instruments by providing an additional avenue for liquidity management through periodic auctions. “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,” he said.

However, participants are not allowed to access the Banks’ discount window on CNI-ABS and CNIN auction days.

The apex bank had earlier this year rolled out other Shari’ah-compliant instruments such as the Central Bank of Nigeria’s Collateralised Non-Interest Asset-Backed Securities (CNI-ABS) and Central Bank of Nigeria’s Non-Interest Notes (CNIN), as part of broader efforts to support non-interest financial institutions and promote ethical finance.