TSA: Banks move N1.2 trn to CBN

Banks were, yesterday, busy with the transfer of an estimated N1.2 trillion of public sector funds to the Central Bank of Nigeria in compliance with the Federal Government directive on Treasury Single Account, TSA.

As the deadline for the implementation of the  Treasury Single Account for MDAs closed, yesterday, Nigerian banks were sorting out accounts of MDAs the CBN circulated among banks to identify which of the accounts was domiciled in their banks.

As a result, there was no trading between banks. According to Central Bank of Nigeria, banks made no bids on the inter-bank money market yesterday as they were engaged on how to comply with the directive to transfer government revenues into a single account with the Central Bank.

President Muhammadu Buhari had ordered that all revenues be paid into the “Treasury Single Account” (TSA) from yesterday, as part of a drive to fight corruption and aid transparency. “No trading is currently going on because no bank was willing to put out quotes until there is a clearer direction with the implementation of the Treasury Single Account,” one dealer said.

“The market is frozen right now, as no trading is going on,” a bank treasurer said.

Analysts have predicted that implementation of the government policy will drain liquidity from the banking system, potentially putting some banks in a dire situation.

The overnight lending rate closed at five per cent on Monday, but dealers said the rate was initially quoted at 200 per cent yesterday. No deals were done using that rate.

About 1.2 trillion Naira, or 10 per cent of banking sector deposits, is expected to be transferred to the government account with the Central Bank in the course of implementing the TSA policy.

Bismarck Rewane, CEO of Financial Derivatives Company said: “We expect an initial paralysis in the market and a disruption of operations of some of the banks, but they would overcome that.”

He said the Central Bank could reduce the size of the Cash Reserve Requirement (CRR) commercial lenders are expected to keep and inject some liquidity into the banking system to minimize the impact of the new accounting policy. The CRR, which is the amount the Central Bank requires banks to set aside, is currently 31 per cent for both public and private sector deposits.

We’ll comply with directive— Banks

Many of the banks contacted by Vanguard said they will comply. This is because since it was the CBN that provided the list of MDAs accounts for banks to move the funds in them to the Single Treasury Account,  it is CBN that can say a particular bank has complied. “By the end of today (yesterday) each bank will know if it has satisfied the CBN,” one of the banks’ treasurers told Vanguard.

http://www.vanguardngr.com/2015/09/tsa-banks-move-n1-2-trn-to-cbn/