7 things to know about CBN’s long-term credit plan to agriculture, and manufacturing sectors

The aim of the new funding scheme is to increase the flow of credit to the real sector of the economy in order to consolidate and sustain economic recovery.

There are two types of facilities in the programme. These are the Differentiated Cash Reserve Ratio (DCRR) and Corporate Bonds (CBs) Program. The DCRR will direct loans to greenfield or expansion projects by allowing banks to drawdown on their cash reserve ratio with the Central Bank of Nigeria (CBN). Emphasis will be placed on new projects in the agriculture and manufacturing sectors

Loans will be given for a minimum of seven years with two years’ moratorium. The participating financial institution (PFI) shall bear the credit risk. Refinancing of existing loans is prohibited for funding under this program and any attempt to falsify information shall attract severe sanctions from the CBN.

Corporate bonds issued under the scheme must meet eligibility criteria as specified by the CBN. Its tenor must be specified in the prospectus by the issuing corporate but it should not be below seven years and the moratorium is also specified in the prospectus by the issuing corporate.

The maximum facility is ₦10 billion per project at an all-in interest rate/ charge of 9 per cent per annum. Repayments shall be amortized and remitted on quarterly basis to the CBN.

Only CRR contributing banks are eligible to participate under the DCRR, while for CBs, all Financial Institutions and general public are eligible to participate in investing in Corporate Bonds are allowed to invest in it.

A borrower under the new scheme shall be an entity incorporated in Nigeria under the Companies and Allied Matters Act of 1990. Such borrower must not have a non-performing facility with any financial institution.