Why Banks Are Jittery Over Low Cash Inflow- Report



There were indications that public sector funds component of banks’ deposit base may have started to shrink, raising fears that it will affect the nation’s economy. This is as the overall cash inflow from the system in the month of August, so far, is about N440 billion compared to about N613 billion in the corresponding period of last month.

Though some bank treasurers are worried over the implementation of the Treasury Single Account (TSA) which will remove public sector funds from the banking system, they are still expecting inflow from Federation Account Allocation Committee (FAAC) at least from the states and some federal establishments this month.

According to the bank treasurers, though the funds are not coming in as in previous months, about N232 billion is being expected before


end of next week.

Analysing the market situation, a source at FSDH Merchant Bank said: “We expect that a total inflow of about N775.28bn will hit the money market from the various government maturing securities and Federation Account Allocation Committee (FAAC) in the month of August 2015”.  According to the analysis, about N232 will be coming from FAAC inflows.

Banks’ treasurers, LCCI worry over Treasury Single Account

Expressing concern over the implementation of the TSA by the Federal Government, Mr. Wale Abe, Executive Secretary of Financial Markets Dealers Association (FMDA), the umbrella body of banks’ treasurers, said the policy would take a chunk of funds from banks, resulting in tighter liquidity and loss of float to banks.

He also indicated that there will be adjustments to banks’ pricing of their instruments which will ultimately affect lending.

Read more here

Credit- Vanguard

SEE ALSO:CBN Bans Foreign Firms From Printing Cheque Books For Nigerian Banks

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