Thursday , October 22 2020
Breaking News
Home / Business / Treasury Single Account: Bank Deposits’ Loss May Hit N2tr

Treasury Single Account: Bank Deposits’ Loss May Hit N2tr

GodwinCBNThe nation’s banks would be losing about N2 trillion deposits to the Central Bank of Nigeria (CBN) with the implementation of the Treasury Single Account (TSA) ordered last week by President Muhammadu Buhari.

Kaduna State, which first adopted the policy, is now followed by Lagos State while others are said to be gearing up to adopt the policy.

The report on accounts of banks with CBN shows that as at beginning of this current quarter, banks’ total public sector deposits was N1.3 trillion but additional net flows come from Federation Accounts Allocation Committee (FACC); as at the end of last month (about N240 billion), the expected inflows by end of this month may push the figure close to N2.2 trillion by the time the pull-out begins next month.

According to the directive from the Presidency, the implementation of the TSA by all ministries, departments and agencies (MDAs) is to enable compliance of MDAs with the provisions of the Constitution. This is also in line with the Presidency’s directives to the National Economic Council (NEC), to ensure full compliance of MDAs to relevant laws on accounting, allocation and disbursement of public funds.

Bankers had pressurized the former government of ex-president Goodluck Jonathan, which had initiated the policy in December 2014, to soft-pedal on its implementation which was originally scheduled for February 2015, on the reasons of a likely negative impact on the economy.

Last weekend, bank treasurers said that the implementation would adversely affect liquidity in the banking system and end up putting pressure on interest rates and availability of credit to the economy.
In a statement at the weekend, Afrinvest Group, a Lagos-based financial investment house, said: “While the directive issued came as the first official statement by the Presidency on the TSA, the Nigerian National Petroleum Corporation (NNPC), earlier began withdrawing its funds from banks for retirement into CBN.

“This had an impact on liquidity level in the banking system, resulting in a surge in money market rates during the period as banks scrambled for funds to cover their liquidity positions.

“With the TSA implementation now extended to all federal MDAs, the Nigerian banking industry, on an aggregate basis, would be affected in terms of deposits and funding cost structure.”

Also, FBN Capital, the investment arm of FirstBank of Nigeria Plc, stated in its money market reports last weekend that NNPC withdrew about N400 billion from the banks last month pushing Open Buy Back (OBB) and overnight interest rates to a record high of 50 percent. It, however, stated that this pressure was corrected when FACC inflow came to the banks within the same period.

In the implementation of the TSA, there will be no FACC inflow anymore to correct or compensate for the outflows.

Comments

comments

Check Also

Nigeria’s Inflation Hits 13.71% In September…… Highest In 30 Months

Nigeria’s inflation rate rose to 13.71%  year-on-year in September 2020, hitting its hghets level in …

UAE Reverses Visa Restriction As Nigeria Lifts Ban On Emirates Airlines

The Federal Government has lifted the ban on Emirates Airlines from operating in Nigeria just …

Social Media Auto Publish Powered By : XYZScripts.com