Prosecute diversion of funds, bar defaulters… CBN revises rules for Anchor Borrowers’ Programme

The Central Bank of Nigeria (CBN) has revised the Anchor Borrowers’ Programme (ABP) guidelines to include prosecution of loan defaulters and blacklisting of farmers.

The apex bank’s development finance department disclosed this in a document titled ‘Anchor Borrowers’ Programme (ABP) Guidelines’, released on Friday.

Under the ABP, loans are provided in kind and cash to smallholder farmers to boost agricultural production, create jobs, reduce food import bills to conserve foreign reserves.

In its revised guidelines, the apex bank warned that commodity associations that fail to repay the loans collected under its ABP would be barred from accessing a new facility and have their pledged collateral foreclosed.

“Failure to repay facility as and when due would attract suspension from accessing new facility until the existing facility is recovered; call-in the personal guarantee of the leadership; and foreclose on all pledged collateral,” the document reads.

For diversion of funds, the CBN said it would blacklist the association and its leadership from all CBN interventions; prosecute the leadership by the participating financial institutions; and also demand repayment of the loan.

The apex bank said the maximum loan limit for each eligible farmer under the programme “shall be decided based on CBN ratified Economics of Production (EOP) and validated land size.”

Repayment will be “by produce and/or cash as may be prescribed by the CBN”.

It noted that in cases where loans are accessed through a commodity association, the leadership of the association would be responsible for full repayment of the facility granted to its members.

“The CBN would bear 50% credit risk after satisfactory evidence that every means of loan recovery has been exhausted by the participating financial institution (PFI),” the document adds.

“The CBN may vary the risk-sharing ratio based on the specific peculiarities/prospects of the Anchor/Project.

“For losses arising from the negligence and/or inaction of the PFI in the execution of any project, the PFI shall bear the full risk and financial losses thereof.

“The PFI shall foreclose on pledged collateral one year after expiration of the initial facility and the risk-sharing ratio prescribed above shall apply on the amount net in default.”

The CBN said the revised guidelines address current realities and developments in the ABP and are aimed at promoting best practices in the implementation of the programme.