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CBN out with new credit guidelines for agric, manufacturing

Central Bank of Nigeria (CBN) plans to increase the flow of credit to the real
sector of the economy to consolidate and sustain the nation’s economic

To this end,
the apex bank on Thursday released new guidelines for its intervention in the sector.

Speaking on the
guidelines, the CBN Acting Director of Corporate Communications, Mr. Isaac
Okorafor, said that the bank intended to achieve this through the commercial

The Monetary
Policy Committee (MPC) at its meeting on July 23 and July 24 introduced revised
guidelines for Accessing Real Sector Support Facility (RSSDF) through Cash
Reserves Requirement (CRR) or Corporate Bonds (CBs).

Okorafor said
that commercial banks would, henceforth, be incentivised to direct affordable,
long-term bank credit to the real sector.

He said that
priority sectors included the manufacturing, agriculture and other sectors
considered by the CBN as employment and growth stimulating.

Okorafor said
that Corporate/Triple-A rated companies would be encouraged to issue long-term
Corporate Bonds (CBs), adding that a Corporate Bonds (CB) Funding Programme had
been put in place.

The programme,
according to him, involves investment by the CBN and the general public in CBs
issued by corporate organizations subject to the intensified transparency
requirements for participating corporates.

He said that
the requirements would include publishing of an Information Memorandum on the
said that the memorandum would spell out the details of the projects for which
the funds were required together with terms and conditions.

He said that it
would also indicate that the long-term projects were employment and growth

Okorafor said
that the apex bank had also put in place a programme under the Differentiated
Cash Reserves Requirement (DCRR) Regime.

He said
commercial banks interested in providing credit financing to greenfield (new)
and brownfield (expansion) projects in the real sector could request four
release of funds from their CRR.

This, he said,
would help to finance projects subject to commercial banks’ providing
verifiable evidence that the funds would be directed to the approved projects
by the CBN.

Okorafor said
that the tenor for the Differentiated CRR would be a minimum of seven years
with a two-year moratorium.

For the
Corporate Bonds (CBs) Programme, he said the tenor and the moratorium would be
specified in the prospectus by the issuing corporate.

Okorafor said
that the maximum facility would be N10 billion per project and the facilities
would be administered at interest rate or charge of nine per cent per annum.

He advised
stakeholders to comply with the guidelines.

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