Banks may have to grapple with new liquidity challenges over treasury single account (TSA) for all government revenues, incomes, and other receipts, even though analysts hail the directive President Muhammadu Buhari gave to ministries, departments and agencies (MDAs).
“For banks, it will mean further pressure on liquidity as they lose some of their public sector deposits.
“Combined with increase in the private sector Cash Reserve Requirement (CRR), this might result in further pressure on banking sector profitability – especially for those banks that were especially dependent on public sector liabilities,” said Razia Khan, Managing Director and Head, Africa Macro Global Research, Standard Chartered Bank.
She predicted that TSA will encourage banks to embark on deposit mobilisation drives, which could lead to lenders winning new accounts.
TheNiche investigation showed that some banks are already increasing deposit rates and introducing aggressive deposit mobilisation to address anticipated liquidity squeeze.
A top banking executive who preferred anonymity also expressed fears that TSA will increase pressure on banks to seek for new sources of deposits, if banks must have cash to trade.
According to him, the scheme, which takes immediate effect countrywide, will deprive banks of a ready source of cheap deposits.
An official of an old generation bank, who also asked not to be named, disclosed that marketers have had their targets increased in recent weeks.
“The pressure is really on; our targets have been raised and everyone has been directed to look for new accounts,” he said.
TSA unifies government bank accounts for consolidation and optimal utilisation of cash resources. It is a bank account or a set of linked bank accounts through which the government transacts all receipts and payments and gets a consolidated view of its cash position at any time.
MDAs are to close their revenue accounts with banks and transfer all available monies to the Consolidated Revenue Fund (CRF) account at the Central Bank of Nigeria (CBN) through an electronic channel process known as e-Collection.