Deposit Money Banks in the country have transferred about N1.5tn from the accounts of Ministries, Departments and Agencies of the Federal Government to the Central Bank of Nigeria as the deadline for the commencement of the Treasury Single Account policy expires yesterday (Tuesday),.

Top bank executives said a huge chunk of the amount left the MDAs’ accounts in the commercial banks for the CBN on Monday.

It was gathered that some of the eight Systemically Important Banks moved about N70bn on the average to the MDAs’ accounts in the CBN on Monday.

The development made the Nigeria Interbank Offer Rate (the rate at which banks borrowed from one another) to jump to about 80 per cent in the early hours of Tuesday before the banks stopped to submit quotes. The rate was five per cent on Monday

Top bank executives told our correspondent that massive cash shortage was already apparent in some of the banks, a development that was forcing the lenders to take to the CBN window where they could borrow funds at above 13 per cent interest rate.

A top official at the Treasury department of a Systemically Important Bank told our correspondent, “Banks are rushing to the CBN lending window to borrow money to cover their position. Many banks discovered on Tuesday that the amount of funds left with them after complying with the directive on the Treasury Single Account is not sufficient to meet their financial obligations.

“Many lenders have to rush to the CBN window to borrow at above 13 per cent on Tuesday. This was after the NIBOR window had already been frozen.”

President Muhammadu Buhari had ordered that all government revenues be paid into the Treasury Single Account from Tuesday as part of a drive to fight corruption and aid transparency.

Analysts have predicted that implementation of the policy will drain naira liquidity from the banks.

Economist and Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, estimated that about 10 per cent of the banking sector deposits was expected to leave the system for the CBN account as a result of the directive.

“About N1.2tn, or 10 per cent of the banking sector deposits is expected to be transferred to the government account with the central bank in the course of implementing the TSA policy,” Rewane told Reuters on Tuesday.

“We expect an initial paralysis in the market and a disruption of operations of some of the banks, but they will overcome that,” he added.

The economist said the central bank could reduce the size of the Cash Reserve Requirement that the banks were expected to keep with it and inject some liquidity into the banking system to minimise the impact of the new account 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

An analyst at Ecobank Nigeria, Mr. Kunle Ezun, said the resultant liquidity challenges in the banking system might make the CBN to postpone a planned mop of liquidity though the CRR this week to next week.

According to him, banks have no alternative but to comply with the directive, saying it is in the best interest of the country in the long run.

“The impact on individual bank’s liquidity will differ from one bank to another, depending on their exposure to public sector funds or deposits. But every bank will have to manage the situation,” Ezun added.

The Financial Times quoted analysts as warning that the rapid outflows from the banking system following the implementation of the TSA would worsen a looming credit crunch facing the financial sector, one of the chief concerns cited by JPMorgan last week when it yanked Nigeria from its influential emerging bonds index.

“If that happens in one day, clearly what you’re going to see is significant shock in the system where there is a serious lack of liquidity and interest rates, which are already very high, will go even higher,” FT quoted an executive of one of Nigeria’s larger commercial banks.

“There is very little lending going on in the system and in this type of interest rate environment, the economy is starved of credit and this affects the ability of companies to invest,” he added.

Several bankers in Lagos said the minimum amount that would have to be transferred by the banks holding government funds was N1.3tn, or roughly $6.5bn.

The CBN Governor, Mr. Godwin Emefiele, concurred with that estimate, saying the amount “could be something” like 10 per cent of the N12tn to N13tn in the banking system, FT reported.

“The amount involved is very substantial and this will further tighten liquidity,” the Chief Executive Officer, United Bank for Africa, Mr. Phillips Oduoza, said.

Oduoza added that the total amount that banks such as UBA would be required to transfer was not yet clear, saying, “Initially, we were told it has to do with the government agencies that actually generate revenue; but now, we are hearing it will involve all the accounts maintained by various government entities with the banks — not just revenue accounts.”

http://www.punchng.com/business/business-economy/cash-shortage-hits-banks-as-tsa-deadline-expires/ lalasticlala

hmmmm. Ok

Sai Chanji

Off to shower, I mst go withdraw the remaining 3k I have in GTB before they start giving coins since money don scarce...

This is further moves to worsen Nigeria's Economy! Watching though

Now they have to work harder to get more deposit and possibly come up with products that are customer and business friendly.

ahhh

We never ground beans moi moi don de smell

Hmmm, hope the disadvantages of this TSA will not over power the advantages.

I reserve my comment until I get to GTBank and First Bank to withdraw my 2,500 and 7,000 respectively, and they start telling me stories. Then, they will know me.


Meanwhile, PMB ride on we are solidly behind you. Change is here. I'm now proud to be a Nigerian. The Green passport must regain it's respect by all means.


Before you quote me, I SHOOT TO KILL. BE WELL ADVISED.

A president spoke and it came to pass. Jonah are you still a learner?

This policy will be beneficial in the long run principally because funds will be geared towards developing the economy as a whole

alright noted

Lol......cash shortage hit bank kee?
Hw manage....if I hear *yimu*

Just for the moment.

#NOPAIN #NOGAIN

We're moving on...EVERY CHANGE HAS A PRICE.

Banks should now focus on being involved in the real economy!

"systematically important banks" my a#$ wipe....

Living fat off government funds and promoting looting. .


Check my signature Call or whatsapp



https://www.nairaland.com/2582274/toks-2008-toyota-fj-cruiser

Issorit

Oops....looking narrow.

I hope this makes the banks better at looking for money outside government....and as someone suggests....CBN can do some temporary measures.

The reason for all this restrictiveness.....oil price has fallen, and it is at $48 for October. The benchmark prize for the budget was $53.

And yeah....we should have saved more...but that would mean this issue would be happening next year...not this year.

young couple on the brink of divorce visit a marriage counselor.
The counselor asks the wife, “What is the problem?”
She responds, “My husband suffers from premature ejaculation.”
The counselor turns to her husband and inquires, “Is that true?”
The husband replies, “Well not exactly; it’s her that suffers, not me.”

Nice...expect crazy deposit promos from banks to mop up liability, attractive fixed deposit rates....Sterling bank is at it already with new accounts/cash deposit promo

Hope dem no go pack all my monie for bank?
Well this would have less impact on top banks, Shape in or Shape out!

All lies!!!

Cash shortage ni

Hmmmm..

Ok

The banks should look elsewhere

How can cash shortage hits banks when in the actual sense cash is stored/kept in Banks

Inevitable.

FG money has no business in such commercial banks in the first place. These banks were thriving on the corrupt and illegal practices of past administrations. Imagine! Money that should go straight to the treasury is kept in commercial banks for the benefits of the bankers. That's illegal.

There are too many scattered accounts. It's a good move to plug such loopholes. Now once an a FG agency remits money, it can be accounted for IMMEDIATELY.

our banking system in nigeria is so lazy,is now to do d main banking work.now each bank will know the value of their customers.including those with little cash.

Banks want to sabotage this TSA...

But Beware MDs of Banks.. We Got a President with Balls