Regulatory Alerts2012-12-12 | FMD/NIFI/01Guidelines for The Operation of Non-Interest Financial Instruments by The Central Bank of Nigeria
The CBN introduced a suite of non-interest financial instruments known as "Nigerian Financial Inclusion Initiative" (NIFI). The purpose was to enhance the depth and liquidity of the Nigerian financial system while deepening financial inclusion. This includes Non-Interest Bearing Drafts (NIbd), Non-Interest Bearing Notes (NIbn), CBN Non-Interest Notes (Cnin), CBN Non-Interest Asset Backed Securities (Cni-ABS) and a governance structure with Market Support Committee and NIFI Product Development Committee. These instruments are interest-free debt instruments offered by the CBN to authorized financial institutions, which can then be traded in the secondary market. The CNIN is a more specific instrument that involves the issuance of non-interest notes evidencing an interest-free loan between a lender (authorised financial institution) and the borrower (CBN), which allows the lender to receive an interest-free loan from the CBN after the maturity of the first loan. The Cni-ABS is another instrument involving the securitization of the CBN's holdings in international Islamic liquidity management sukuk or other reserve currency-denominated instruments by multilateral organizations.