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CBN may publish names of agric fund defaulters, risk 5-year jail term for diversion

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The Central Bank of Nigeria (CBN) stated that it would publish names of loan defaulters under its Agricultural Credit Guarantee Scheme in the newspapers.

This is according to a document titled “Guidelines for the Agricultural Credit Guarantee Scheme” recently released by the CBN.

The CBN also warned that borrowers who divert the funds provided under the Agricultural Credit Guarantee Scheme Fund (ACGSF) may earn a five-year jail term.

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What the CBN is saying

According to the CBN, the Fund aims to provide a guarantee in respect of loans granted by lending banks for agricultural purposes under the scheme. In furtherance of the scheme, the bank will do what it must to recover loans from defaulters.

The Fund if considered necessary will publish names of defaulters in the newspapers and report same to the Credit Information Bureau of Nigeria,” the bank stated.

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The apex bank, however, cautioned that the agriculture loans must be used for purposes for which they are obtained, as a diversion would attract a five-year jail term.

“Banks should remind prospective borrowers under the Scheme that it is an offence for which one may be imprisoned for five years to apply the loan for purposes other than those for which they are given,” the new guidelines instruct.

The program intends to boost the level of bank credit to the agricultural sector. Loans under the amended act include advances, overdrafts and any credit facility.

The purpose of the Fund is to provide guarantee in respect of loans granted by lending banks for agricultural purposes under the scheme with the aim of increasing the level of bank credit to the agricultural sector.

“Loan” under the amended act includes advances, overdrafts and any credit facility and should be taken as such wherever it is used in these guidelines and other circulars.

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What you should know about the ACGSF

  • Agricultural Credit Guarantee Scheme Fund was established by the federal military government in 1977 and amended on 13th June 1988, and 26th June 2019.
  • All applications to lending banks for loans under the scheme will be made on the form prescribed for the purpose; individual accounts opened for each beneficiary under the scheme by the lending bank and accounts opened for purpose of lending under the scheme for co-operative or group loan.
  • The guideline states that maximum liability of the fund in respect of any guarantee given under the scheme will be fixed from time to time by the ACGSF board.
  • The single obligor limit for non-tangible collateral is N100,000 while the obligor limit for individual, group/co-operative or a corporate society is N50,000,000 for secured loans.
  • Banks are not expected to demand tangible securities or feasibility reports for loans of less than N100,000.00; nonetheless, there should be cross-guaranteeing among members of a group or cooperative, as well as any other guarantee acceptable to the bank.
  • The liability of the fund would be 75 per cent of the amount in default, net of any amount realised by the bank from the security it got from the borrower, subject, in the case of a loan to an individual, a co-operative society or a corporate body, to a maximum of N50 million.
  • Whenever a guaranteed advance is repaid or the credit facility is otherwise terminated, the bank must immediately notify the Fund by giving the Guarantee Certificate details.
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