CBN moves agric loans closer to applicants

To bring the administration of the Agricultural Credit Guarantee Scheme (ACGS) closer to farmers, the Central Bank of Nigeria (CBN) has opened Development Finance Offices in all of its branches across the country.

This is part of the scheme’s revised parameters, which the apex bank revealed yesterday.

“Apart from the Central Bank of Nigeria’s Head Office, Development Finance Offices have been established in all Central Bank branches to manage the Agricultural Credit Guarantee Scheme,” it stated. Officers work at the Development Finance Offices, who are overseen by the Central Bank’s Branch Controllers in each branch.

“To ensure that matters relating to the Scheme are dealt with as quickly as possible, the Officers will treat such matters in the state in which they are located unless banks are ordered otherwise.”

However, the CBN stated that the agriculture loans must be used for the purposes for which they were secured, since any diversion would result in a five-year prison sentence.

“Banks should remind prospective borrowers under the Scheme that using the loan for reasons other than those for which it was issued is an infraction for which one may be imprisoned for five years,” according to the new guidelines.

It set a single obligor limit of N100,000 for non-tangible collateral, “while the obligor maximum for secured loans for an individual, group/co-operative, or corporate society is N50,000,000.00 (Fifty million naira only).”

According to the Act, the Fund’s responsibility shall be 75 percent of the amount in default, net of any cash realized by the bank from the security it received from the borrower, up to a maximum of N50,000,000 in the instance of a loan to an individual, a co-operative society, or a corporate body (Fifty million naira only).

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The CBN further stated that MFBs must rigorously follow to the Revised Regulatory and Supervisory Guidelines, which mandates that the maximum principal amount for a microloan should not exceed N500,000.00 or 1% of the shareholders’ fund unaffected by losses.

The Federal Military Government established the Agricultural Credit Guarantee Scheme Fund Decree No. 20 in 1977 (Decree No. 20), which was revised on the 13th of June 1988 and the 26th of June 2019.

The Act originally called for a N100 million fund to be established, with the Federal Military Government (60%) and the Central Bank of Nigeria (40%) each contributing 60%. (40 per cent).

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