CACS: CBN modifies implementation of N200bn agric fund

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…To sanction banks for fund diversion

In a bid to further enhance credit supply to the agri­cultural sector, the Cen­tral Bank has reviewed the strategy for implementation of N200 billion Commercial Agricultural Credit Scheme (CACS).

The reviewed guidelines, according to an accompany­ing circular referenced FPR/DIR/CIR/GEN/001/007, signed by Kevin Amugo, Director, Financial Policy & Regulation Department, post­ed on its website on Wednes­day, disclosed, “the extension of CACS terminal date from September 30, 2016 to Sep­tember 30, 2025 with effect from May 14, 2014.”

The apex bank, which stated that the reviewed strat­egy supersedes all former guidelines, explained that the fund shall be made available to the participating bank(s) to finance commercial agricul­tural enterprises.

While it approved the par­ticipation of all deposit money banks under the scheme, the CBN stated that all partici­pating banks are required to sponsor projects from any of the target areas indicated in the guidelines and bear all the credit risk of the loans they will be granting.

According to CBN, the target agricultural commodi­ties and value chains to be covered under the scheme are production of cash/food crops, poultry, processing, storage, farm input supplies and marketing.

The circular indicated that the single obligor for any proj­ect from a participating bank under the scheme would be N2 billion while it would be N1 billion for state govern­ments.

In addition, CBN said that each state government could borrow up to N1 billion for onlending to farmers’ cooper­ative societies and other areas of agricultural development provided such initiatives/in­terventions are in line with the objectives of CACS.

Meanwhile, the scheme, which would be financed from the proceeds of the N200 billion three-year bond raised by the Debt Management Of­fice (DMO) is to be approved by CBN through the Board of Directors and the Committee of Governors.

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