Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Business News

Critical points to note about CBN’s newly introduced Financial Instruments

Gbenga Agoye by Gbenga Agoye
August 25, 2017
in Business News
CBN Gov Godiwn Emefiele
Share on FacebookShare on TwitterShare on Linkedin

The Central Bank of Nigeria(CBN) has introduced two new financial instruments to aid liquidity management and deepen the financial system.

It stated this in a circular signed by the  Director, Financial Markets Department, Dr Alvan Ikoku; the apex bank revealed that it has introduced  “Funding for Liquidity Facility (FfLF)” and “Intra-day Facility (IDF)” through its window, for access by Non-Interest Financial Institutions (NIFIs) licensed by the Bank.

Funding for Liquidity Facility (FfLF)

1). CBN will provide a liquidity facility on overnight basis only and to be terminated on next business day

RelatedPosts

European Commission set to regulate Cryptos

Nigeria’s inflation rate rises to 12.34% as COVID effects bite harder

2). Authorised Non-Interest Financial Institution (NIFI) to provide eligible securities to the CBN as collateral for the facility

3). The value of collateral to be a minimum of 110% of the value of the facility. For instance, if a NIFI wishes to take a FfLF of N10 billion, it would be required to provide eligible security collateral worth N11 billion (i.e. N10 billion*1.1).

4). The CBN shall specify acceptable collateral(s) from time to time. These shall include, but not limited to the following securities: CBN Safe Custody Account (CSCA) Deposit, CBN Non-Interest Note (CNIN), CBN Asset-Backed Security (CBN-ABS), Sukuk (that has received liquidity status from the CBN), Warehouse receipt(s) as provided in the CBN Act 2007, and any other collateral designated by the CBN that does not contravene the CBN guidelines for NIFI’s operations.

5). The transaction shall be at a zero per cent interest rate

6). At maturity, the transaction unwinds and the CBN receives back its funding and returns the collateral to the NIFI

News continues after this ad


7) Failure to provide adequate funding in the account for the un-winding of transaction at maturity, the Bank (CBN) shall rediscount the pledged securities at par and recover the facility amount and return the net value to the NIFI

8). The Market Support Committee (MSC) may approve an administrative charge in relation to the facility as it deems fit (in accordance with Section 4 (1) of the ‘Guidelines for the Operation of NIFI instruments by the CBN).

9). The NIFI must be either in clearing and have a temporary debt balance and /or have a liquidity problem

Intra-day Facility (IDF)

10). CBN to provide an Intra-Day Facility (IDF) for settlement same business day

11). Authorized NIFI shall provide eligibility securities as collateral for the facility

12). The value of eligibility securities shall be a minimum of 11% of the value of the intra-day facility required by the NIFI. For example, if a NIFI wishes to take an IDF of N10 billion, it would be required to provide eligibility security collateral worth N11 billion (i.e. N10*1.10)

13). The CBN shall specify acceptable collateral(s) from time to time, which shall, but not limited to CBN safe Custody Account (CSCA) Deposit, CBN Non-Interest Note (CNIN), CBN Asset-Backed Security (CBN-ABS), Sukuk (that has received regulatory treatment by the CBN), Warehouse Receipts(s) as provided in the CBN Act 2007, and any other collateral designated by the CBN that does not contravene the CBN guidelines for NIFI’s operation.

14). At termination, the transaction unwinds and the CBN receives back its funding and returns the collateral securities to the NIFI.

15). In the event of failure to repay the IDF as and when due, the CBN shall rediscount the pledged securities at par and recover the facility amount and return the net value to the NIFI

16). The Market Support Committee (MSC) may approve an administrative charge in relation to the facility as it deems fit, in accordance with the Guidelines for the operation of NIFI instrument by the CBN.

Related

Tags: CBN NigeriaDr Alvan IkokuFinancial InstrumentsFunding for Liquidity FacilityIntra-day Facility (IDF)News ReviewNon-interest banks

Comments 1

  1. Odufeso Olalekan says:
    August 25, 2017 at 4:58 pm

    Wath Skye Bank set for is Divided and AGM?

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

inq
avatrade
Stanbic bank
Mega Millions
UBN
Hot forex
Access Bank
Bankers Committee
First bank






    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • Nigeria losing N3.5 trillion annually to post-harvest losses
    • Top Nigerian Pension Fund Administrators by RSA contributors for micro pension as of June 2022
    • Airtel shareholders earn N651 billion on NGX fuelled by positive sentiment in July

    Follow us on social media:

    Recent News

    Banks guaranteed N3.6 billion loans to farmers under the ACGSF - CBN, Agriculture vs Unemployment: Buhari's farming policy has a major flaw, Does sending "able-bodied youths" to the farms increase productivity?, Agricultural financing, Top AgriTech deals currently on sale in Nigeria – June 2020

    Nigeria losing N3.5 trillion annually to post-harvest losses

    August 12, 2022
    Pension Reform Act

    Top Nigerian Pension Fund Administrators by RSA contributors for micro pension as of June 2022

    August 12, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Financial Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Metrics
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • Business News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com