Central Bank of Nigeria deploys non-interest master repo agreement and begins auctions of CNI-ABS and CBN Non-Interest Note

The Central Bank of Nigeria (CBN) has announced the deployment of the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement (NNMRA) and the commencement of auctions for two non-interest liquidity management instruments, the CBN Non-Interest Asset-Backed Securities (CNI-ABS) and the CBN Non-Interest Note (CNIN), for eligible market participants including non-interest banks, conventional banks with non-interest windows, and authorised dealers. NNMRA is intended to standardise and regulate repurchase (repo) transactions in the non-interest banking sector, provide an internationally acceptable framework, and define counterparty responsibilities including the CBN’s. CNI-ABS is described as an asset-backed liquidity management instrument structured in line with non-interest finance principles, while CNIN evidences an interest-free loan between eligible participants and the CBN and will be offered through periodic auctions. Firms are required to integrate the instruments into their operations and comply with applicable guidelines and circulars, including the CBN’s “Revised Guidelines for the Operation of Non-Interest Financial Institutions’ Instruments, 2022”, and participants may not access the CBN’s discount window on CNI-ABS and CNIN auction days. The CBN indicated it will monitor market developments and provide further guidance as needed.