INSURE COMMERCIAL AGRIC LOANS, SAYS CBN

With immediate effect, all loans under the Commercial Agricultural Credit Scheme (CACS) administered by the Central bank of Nigeria CBN are to be insured by the Nigeria Agricultural Insurance Corporation ( NAIC).

According to the CBN in a circular to banks dated August 15 and signed by Kevin Amugo, Director, Financial Policy and Regulation, the loans under CACS should be insured as provided for by the law establishinh NAIC.

The review of the CACS guidelines to give effect to this, says the CBN, was 'to enhance its effectiveness and further mitigate the risks faced by participating financial institutions in financing agricultural sector'.

In 
furtherance of the above, the circular added, "the CBN hereby directs the immediate commencement of insurance premium payment by borrowers under the CACS  scheme".

It then concluded thus: " Participating financial institutions and stakeholders are requested to note that these guidelines supersede other related versions".

Banks and stakeholders were then advised to download the revised guidelines from CBN site or contact the CBN.

CACS was introduced in 2009 by the CBN and the Federal ministry of agriculture and water resources to provide credit to agricultural value chain that is, production, processing, storage and marketing.

It was established with N200bn raised by the Debt Management Office to fisbytse loans at maximum of 9% to borrowers and any subsidy plus administration charges were to be borne by the CBN.

It covers cash and food crops, poultry, livestock and aquaculture on a large scale.

Also covered were processing, storage, farm input supplies and marketing.

Those expected to access the facility were corporate and large scale farmers,  and state governments. The loans have minimum 3years tenor and accepted collaterals include charge on movable property, life insurance, promissory note, stocks and shares and others above accepted in practice.

It is different from the Agricultural credit guarantee scheme (ACGSF) introduced in 1977 also with FGN and CBN collaboration and from the Agricultural credit support scheme (ACSS) introduced too with N50bn capital to extend credit to practising farmers and agro allied entrepreneurs with means through farmers associations and as large scale farmers.

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