Banks Face Liquidity Issue With President Buhari's Directive On Government Accounts ~ BimzTheory

Banks Face Liquidity Issue With President Buhari's Directive On Government Accounts

Banks might have a negative downturn with the recent directive from President Buhari that all federal ministries, departments and agencies, MDAs, pay all government revenues, incomes and other receipts into a Treasury Single Account, TSA, with the Central Bank of Nigeria, CBN.

The TSA is a unified structure of government bank accounts enabling consolidation and optimal utilisation of government cash resources. It is an account through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.

However, according to reports, this will significantly affect the volume of liquidity in the banking sector because once the banks collects government’s funds, it will be sent directly to the TSA with the CBN hence no more free funds for them.

Speaking on this new develpoment, the Head of Research at Sterling Capital Limited, Sewa Wusu, explains that although the policy will surely affect the flow of liquidity in the banking system, it will help bring about transparency and effective revenue management for the Federal Government.