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ACGSF Loan Diverters Risk Five-Year Jail Term —CBN

Loan applicants who divert funds under the Central Bank of Nigeria’s (CBN) Agricultural Credit Guarantee Scheme risk a five-year jail term, the Apex bank has said.

The CBN, in a report titled ‘Guidelines for the Agricultural Credit Guarantee Scheme’, explained that it is an offence for individuals to utilize the disbursed loans for purposes outside those for which they were given.

The report released on Thursday stated, “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.”

It would be recalled that the Bank of Agriculture (BoA) recently called out loan defaulters under the Anchor Borrowers Scheme.

AgroNigeria reported that the Bank recently disclosed that only about 10 per cent of the borrowers have repaid the loans.

The CBN, however, noted that the maximum liability of the fund in respect of any guarantee given under the scheme would be fixed from time to time by the ACGSF board.

According to the CBN, the maximum aggregate outstanding balance permitted for any obligor for non-tangible collateral is N100,000.

However, the outstanding balance permitted for secured loans is N50 million, and it applies to individuals, groups/co-operatives, or corporate societies.

It said 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.

The central bank also said the revised regulatory and supervisory guidelines of microfinance banks must be strictly adhered to as “it stipulates that the maximum principal amount for a microloan shall not exceed N500,000 or one per cent of the shareholders’ fund unimpaired by losses and or as may be reviewed from time to time by the CBN”.

The post ACGSF Loan Diverters Risk Five-Year Jail Term —CBN first appeared on AgroNigeria.

The post ACGSF Loan Diverters Risk Five-Year Jail Term —CBN appeared first on AgroNigeria.

Sourced from Agro Nigeria

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