Nigerian deposit money banks have halted accepting new loan applications under the Central Bank of Nigeria’s (CBN) development finance intervention funds.
This development was disclosed through a notification sent to customers by Access Bank on Monday.
This followed an earlier announcement in December 2023 by the CBN officially discontinuing the processing of new loan applications under its existing development finance intervention funds program.
These programs include notable schemes such as the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), Accelerated Agricultural Development Scheme (AADS), Anchor Borrowers Program (ABP), Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS), and the Real Sector Support Fund (RSSF).
The communication from Access Bank also emphasized that all existing CBN development finance intervention funds with approved interest rates will remain unchanged. Customers are expected to fully repay these existing loans in accordance with the agreed terms and conditions.
Despite suspending new applications, Access Bank assured its customers of an unwavering commitment to providing exceptional customer experiences. The bank suggested that customers needing additional funds explore the available loan products and services tailored to meet their banking needs.
This unexpected decision by Nigerian banks to suspend new applications for CBN intervention funds raises questions about the potential implications for businesses and individuals seeking financial support amid economic challenges. Stakeholders are closely monitoring the situation for further developments.
Olayemi Cardoso, governor of the CBN, had revealed that the apex bank’s total disbursements under its development finance intervention have surged to N10 trillion. However, details regarding the unrecovered amount as of the current date were not provided.
On the other hand, industry observers estimate that the outstanding unrecovered loans, particularly under the Anchor Borrower Program, stand at a substantial N580 billion. The lack of clarity on these unrecovered amounts has raised concerns about the financial health of the intervention programs and the potential impact on the broader economy.
The CBN had issued a circular titled, “Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria, CBN Development Finance Intervention Programme.” This circular signals a strategic shift in the CBN’s policy approach, emphasizing a pullback from direct development financing interventions.
One key implication of this shift is that the burden of recovering these outstanding loans will now be shouldered by the commercial banks through which the loans were originally disbursed. This move represents a significant policy adjustment, and places added pressure on the banking sector to navigate the complexities of loan recovery in the face of economic uncertainties.
