CBN Suspends New Applications For Intervention Loans
The Central Bank of Nigeria (CBN) has stopped accepting new loan applications for processing under any of its existing intervention programmes and schemes.
The central bank disclosed this in a circular dated December 8, 2023, and signed by its acting Director, Development Finance Department, Sa’ad Hamidu, which was addressed to chief executives of Nigerian banks.
The central bank also said banks shall be responsible for the recovery of the outstanding balance on all facilities previously accessed through their banks.
The apex bank explained that the move was in furtherance of its new policy thrust focusing on its core mandate of ensuring price and monetary stability.
Hamidu said the CBN has therefore, commenced its pull back from direct development financing interventions.
Accordingly, he stressed that the bank would be moving into more limited policy advisory roles that support economic growth.
The statement said: “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 their respective approval letters.”
Essentially, the intervention schemes were aimed at ensuring monetary, price and financial system stability as a catalyst for inclusive growth and sustainable economic development.
Its involvement in development financing, it said, was driven by the need to address market failures resulting from the apathy of banks to lend to critical sectors/segments of the economy due to perceived risks.
The previous leadership of the bank believed it must maintain a sound financial environment that supports the ease of access to finance by the real sector.
The bank’s commitments to the economy can be classified as core and developmental.
Through its interventions, the central bank had improved access to affordable and long-term finance to the real sector, de-risked the priority sectors by incentivising banks and other financial institutions to lend, and stimulated investments in the productive base of the economy. One of such interventions was the Anchor Borrower Programme (ABP).
