By Nse Anthony-Uko
(Sundiata Finance) – Central Bank of Nigeria (CBN) on Thursday directed borrowers, under the Commercial Agriculture Credit Scheme (CACS), to commence payment of insurance premium immediately.
Kevin Amugo, director, financial policy and regulation department of the CBN, contained this directive in a circular to all banks on amendment of CACS guidelines issued on Thursday. The CBN has reviewed the guidelines for CACS to enhance its effectiveness and further mitigate the risks face by participating financial institutions in financing the agricultural sector. In the revised guidelines, the Nigerian Agricultural Insurance Corporation (NAIC) is required to henceforth provide insurance cover for all agricultural facilities/ projects under the CACS in line with the NAIC Act.
“These guidelines take immediate effect and supersede the Guidelines for Commercial Agriculture Credit Scheme (CACS) 2010 and subsequent amendments in respect thereof. It is subject to review from time to time as may be deemed necessary by the Central Bank of Nigeria,” the revised guidelines stated.
The CBN in collaboration with the Federal Government, represented by the Federal Ministry of Agriculture and Rural Development (FMARD), established the Commercial Agriculture Credit Scheme for promoting commercial agricultural enterprises in Nigeria, which is a sub-component of the Federal Government of Nigeria Commercial Agriculture Development Programme (CADP).
The modalities of the Scheme is such that agricultural credit from the participating banks shall be in the form of loans and the Interest on CACS facility shall not exceed 9.0 per cent inclusive of all charges to be shared between the participating bank and the CBN; 7 per cent and 2 per cent, respectively.
The scheme shall terminate on September 30, 2025, but the exit date does not apply to the tenor of individual loans and overdrafts, which are based on their gestation period.