…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.