Nigeria’s central bank extends settlement banking arrangement to all clearing sessions

The Central Bank of Nigeria (CBN) has extended settlement banking arrangement to all clearing sessions effective January 2018.

The current settlement framework, which categorise banks into settlement amd non-settlement banks, allows for settlement banks to settle their net settlement obligations and that of their non-settlement banks arising from cheque clearing and other instruments in sessions one and two only.

In a circular signed by Dipo Fatokun, its director of banking and payment systems department, to all money deposit banks and the Nigeria Interbank Settlement System, the CBN said it is extending the framework to all clearing sessions, adding that the settlement banking framework introduced on April 1, 2004 has worked very well and contributed to the relative stability in the net settlement operations for settlement of clearing sessions one and two on the RTGS platform.

The real time gross settlement system (RTGS) is a specialist funds transfer system for high-value transactions that require immediate clearing. The system is usually operated by a country’s central bank. Participants in the CBN RTGS are commercial banks, discount houses, Nigeria Inter-Bank Settlement System (NIBSS) and the CBN.

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To this end, it said it advised all deposit money banks to update the agency agreements with their respective non-settlement banks.

As for merchant banks that do not have settlement banks, they should appoint a settlement bank and inform the director of banking and payment systems department on or before December 15, 2017 with a copy pf the letter from the settlement bank accepting to settle for them