New Guidelines For The Agricultural Credit Guarantee Scheme – CBN

Agricultural Credit Guarantee Scheme…

The Central Bank of Nigeria (CBN) has issued new operational guidelines for participants and operating institutions in the Agricultural Credit Guarantee Scheme Fund, which was established by the federal military government in 1977 and updated on June 13, 1988, and June 26, 2019.

The Fund’s goal is to increase the amount of bank credit available to the agricultural sector by providing a guarantee for loans made by lending banks for agricultural purposes under the plan. Under the modified statute, “loan” include advances, overdrafts, and any credit facility, and should be interpreted as such throughout these guidelines and other circulars.

The guideline was published on the apex bank’s website on Friday.

The bank said that all applications to lending banks for loans under the scheme will be made on the form prescribed for the purpose; individual accounts will be opened for each beneficiary under the scheme by the lending bank, as well as accounts opened for the purpose of lending under the scheme for co-operative or group loans.

As a condition antecedent to guarantee, all loans under the plan must be insured.

The Agricultural Credit Guarantee Scheme Fund (ACGSF) board will set the fund’s maximum liability in respect of any guarantee granted under the plan from time to time, according to the guideline.

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The stated single obligor limit for non-tangible collateral is N100,000, while the obligor maximum for secured loans is N50,000,000 for individuals, groups/co-operatives, and corporate societies.

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. This applies to loans to individuals, co-operative societies, and corporate bodies.

The revised regulatory and supervisory requirements for MFBs must be rigorously followed, since they state that the maximum principal amount for a microloan cannot exceed N500,000.00 or 1% of the shareholders’ fund unaffected by losses, or as the CBN may review from time to time. This must be the case when it comes to ensuring their amenities.

The aforesaid maximum of the Fund’s guarantee responsibility will apply to the total loan issued to the borrower (s) by all the banks when two or more banks jointly finance a project. Mr Fashola continued, “We applied for land from the states and we set out to do a demonstration or a pilot programme because we then wanted to validate what we saw and build a pilot scheme,” while emphasizing that the current National Housing Programme is a pilot or demonstration scheme meant, among other things, to galvanize private sector participation.

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