CBN stops loan applications, hands over debt recovery to banks

The Central Bank of Nigeria (CBN) says it is suspending the application of new loans for processing under any of its existing intervention programmes and schemes.

CBN disclosed this in a circular signed by Sa’ad Hamidu, acting director of development finance department, on Tuesday.

In the circular titled ‘Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria, CBN Development Finance Intervention Programme’, CBN also charged banks with the responsibility of recovering previously granted loans under the scheme.

“In furtherance of the Central Bank of Nigeria’s new policy thrust focusing on its core mandate of ensuring price and monetary stability, the Bank has commenced its pullback from direct development financing interventions,” the apex bank said.

“Accordingly, the CBN would be moving into more limited policy advisory roles that support economic growth.

“In consideration of the above, the CBN wishes to inform you that it has stopped accepting new loan applications for processing under any of its existing intervention programmes and schemes.

“It is important that you communicate this to your customers. And, kindly note that the interest rates, as well as other terms and conditions on all existing facilities, remain as contained therein in their respective approval letters.

“You may also wish to note that your bank shall be responsible for the recovery of the outstanding balance on all facilities previously accessed through your bank.”

In October, Olayemi Cardoso, CBN governor, said the financial regulator will pull back from direct development finance interventions.

Cardoso said the apex bank needs to return to its core functions of monetary policies and advisory roles to support economic growth, rather than be involved in fiscal interventions.