The full implementation of the treasury single account (TSA) by the federal government is unsettling deposit money banks as the financial institutions are aggressively in search of new sources of deposits and other ways of sustaining market liquidity.

THISDAY’s findings showed that in the past few weeks when the policy commenced, commercial banks have continued to hone their retail and treasury products to make them attractive to customers. In addition, a lot of banks have developed various initiatives to attract operators of small and medium scale enterprises.

The TSA and a slew of regulatory actions are expected to affect banks’ bottom lines this year.
The TSA is federal government’s independent revenue e-collection initiative that has automated revenue collections of ministries, departments and agencies (MDAs) directly into the federal government’s consolidated revenue fund (CRF) account at the Central Bank of Nigeria (CBN). It does not allow MDAs’ funds to stay in the vault of commercial banks.

The TSA is also an essential part of modern cash management system and is an effective tool for a government to establish oversight and centralised control over its cash resources. It is a unified structure of government bank accounts.

Group Managing Director/Chief Executive Officer of FirstBank Nigeria Limited, Mr. Bisi Onasanya, in an interview with THISDAY confirmed the significant reduction in the inflow of government funding into the banking system as a result of the federal government’s policy.

“Banks have had significant reduction in their level of government's deposits. It is not just because of the reduction in oil price, it is also because of the restructuring of the fiscal accounting, in which the TSA has been implemented.

“That, has almost necessarily moved away public accounts at the federal level from the vaults of commercial banks into the central bank. That has reduced the liquidity in the financial sector.

Liquidity is shrinking also and you have to look at the impact on your liquidity ratio and liquidity management in all the things that you do,” he explained.

But the CBN Director, Corporate Communications, Ibrahim Muazu described the TSA as a government policy, which is part of the national payment initiative aimed at modernising the country’s payment system.

“Many MDAs have complied and it is going to have positive impact on the economy,” he added.

On their part, analysts at Afrinvest West Africa Limited argued that “in light of the TSA policy, we expect the CBN to unleash the strings on public sector deposits from the current 75 per cent as we anticipate less public funds will be available to the banks.”

The Coordinating Minister for the Economy/Minister of Finance, Dr. Ngozi Okonjo-Iweala earlier this month confirmed that the federal government had successfully moved MDAs’ accounts to the CBN.

She had said the move would help the central bank to effectively manage the funds of the government. The minister said the new platform would enable the government to manage its account balances effectively.

Also, the CBN had last month advised all banks in the country to put in place necessary systems in their branches and to also sensitise their staff members on the federal government’s electronic revenue collection scheme (e-collection) because of the commencement of the TSA. It had also urged banks to ensure the internet banking platforms at their braches have been configured for use by revenue payers, to make transfers to the federal government’s e-collection account seamless.