The Central Bank of Nigeria has announced the introduction of three new instruments aimed at deepening the country’s non-interest financial market and improving liquidity management for Islamic finance institutions.
The announcement was made in a circular dated May 23, 2025, which forms part of the Bank’s wider strategy to strengthen the adoption and operational efficiency of non-interest banking instruments across Nigeria’s financial system.
The circular, signed by the acting Director of the Financial Markets Department, Okey Umeano, was obtained by The PUNCH from the CBN website on Tuesday.
The new tools include the Nigerian Non-Interest Financial Institutions’ Master Repurchase Agreement, the CBN Non-Interest Asset-Backed Securities, and the CBN Non-Interest Note.
These instruments are expected to standardise market practices, broaden participation, and align Nigeria’s Islamic finance offerings with global best practices.
Central to the CBN’s liquidity framework is the NNMRA, a contractual agreement designed to regulate repurchase (repo) transactions in the non-interest financial markets.
The agreement provides a globally accepted structure for Islamic financial institutions to manage liquidity without breaching Shariah principles.
Through the NNMRA, the CBN aims to clarify the responsibilities of all parties involved in non-interest repo transactions, including banks operating Islamic finance windows and the apex bank itself.
This is a major step, as non-interest banks in Nigeria have historically struggled with limited options for managing short-term liquidity in compliance with Islamic law.
The NNMRA is expected to support more efficient interbank funding and better integration of non-interest financial institutions into Nigeria’s broader monetary operations.
In addition to the master repo framework, the CBN also announced the start of auctions for two new Islamic liquidity instruments — the CNI-ABS and the CNIN.
The CNI-ABS is a tradable instrument backed by tangible assets and structured according to non-interest finance principles. It is designed to help Islamic banks manage excess liquidity and meet reserve requirements without depending on conventional interest-based instruments.
The CNIN is an interest-free loan between the central bank and eligible participants, complementing the CNI-ABS by offering an additional channel for liquidity absorption through periodic auctions.
Together, these two instruments form the cornerstone of the CBN’s Islamic liquidity management strategy, providing non-interest banks with reliable and recurring mechanisms for liquidity management.
The circular directs all authorised participants, including fully-fledged non-interest banks and conventional banks with Islamic banking windows, to incorporate these instruments into their operations.
The CBN stresses that these institutions must comply fully with existing guidelines, circulars, and relevant regulatory frameworks. Importantly, participants will be barred from accessing the Bank’s discount window on CNI-ABS and CNIN auction days, reinforcing the separation between Islamic and conventional liquidity operations.