News Column

Banks Urged to Remit Proceeds of Agric Loan Repayment

June 11, 2014

Deposit Money Banks (DMBs) participating in the Commercial Agricultural Credit Scheme (CACS) have been advised to commence the repatriation of proceeds of the loan repayment on quarterly basis with effect from July 1, 2014.

They are to remit the monies to the Central Bank of Nigeria (CBN). The central bank gave the directive in a circular to all banks dated May 26, 2014, a copy of which was posted on its website on Monday.

The circular titled: "Commencement of Quarterly Repatriation of Proceeds on CACS Loan Repayment," was signed by the Director, Financial Policy and Regulation Department, Kevin Amugo.

The central bank in collaboration with the Federal Ministry of Agriculture had established the CACS for promoting commercial agricultural enterprises in Nigeria.

The CACS is a sub-component of the federal government's Commercial Agriculture Development Programme (CADP).

This fund complements other special initiatives of the central bank in providing concessionary funding for agriculture such as the Agricultural Credit Guarantee Scheme (ACGS) which is mostly for small scale farmers, Interest Draw-back scheme, Agricultural Credit Support Scheme, among others.

The scheme is being financed from the proceeds of the N200 billion three-year bond raised by the Debt Management Office (DMO). The fund is always made available to the participating banks to finance commercial agricultural enterprises.

Continuing, the regulator in the circular stated that further to the revised CACS guidelines issued on May 14, 2014, and the sensitisation workshop held in Lagos recently, banks must adhere strictly to section 19(i) of CACS guidelines which states that: "Repayment proceeds from CACS projects shall be repatriated on quarterly basis to the CBN.

"Whenever a credit facility is discontinued, the PB shall repatriate the funds within five working days to the CBN, giving details of the credit facility."

It warned that failure to adhere to guidelines would attract sanctions in line with Section 15 (Viii) which states that failure to repatriate expired projects funds within five working days "shall be charged a penalty interest of MPR +300 basis points for he period the fund was repatriated."

The CBN recently approved the extension of the terminal date of the CACS from September 30, 2016 to September 30, 2025. The extension became effective since May 14, 2014.

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Source: AllAfrica