The Central Bank of Nigeria has introduced three new financial instruments aimed at strengthening the country’s non-interest financial market and enhancing liquidity management for Islamic banking institutions.
According to a circular, signed by the acting Director of the Financial Markets Department, Okey Umeano, dated May 23, 2025. The bank stated that this move is part of the Bank’s broader strategy to strengthen the adoption and enhance the operational efficiency of non-interest banking instruments across Nigeria’s financial system.
The new instruments, the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement, the CBN Non-Interest Asset-Backed Securities, and the CBN Non-Interest Note aim to standardize market practices, expand investor participation, and align Nigeria’s Islamic finance framework with global standards.
The CBN’s implementation of the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement (NNMRA) is a pivotal move to address a long-standing gap in Islamic finance.
By clearly outlining the roles of banks and the apex bank in non-interest repo transactions, it provides much-needed structure for liquidity operations. This framework is especially crucial as Islamic banks in Nigeria have had limited tools to manage short-term funds without violating Shariah principles.
The NNMRA is set to enhance interbank liquidity operations and integrate Islamic banks more fully into national monetary systems.
Alongside this, the Central Bank has introduced two key instruments: the CBN Non-Interest Asset-Backed Securities (CNI-ABS), which helps Islamic banks manage surplus funds using asset-backed, tradable tools; and the CBN Non-Interest Note (CNIN), an interest-free facility for absorbing liquidity. Together, these instruments mark a strategic shift in the CBN’s non-interest liquidity framework.
The CBN has instructed all authorized Islamic banking participants, including full-fledged non-interest banks and conventional banks with Islamic windows, to adopt the new instruments into their operations.
Compliance with all regulatory frameworks is mandatory. Additionally, on auction days for the CNI-ABS and CNIN instruments, access to the Bank’s discount window will be restricted, ensuring a clear distinction between Islamic and conventional liquidity activities.
