The Central Bank of Nigeria has stated that farmers must obtain insurance coverage before receiving loans from the Agricultural Credit Guarantee Scheme Fund.
This was stated by the CBN in its instructions for the Agricultural Credit Guarantee Scheme Fund, which was announced on Friday.
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“As a condition precedent to guaranteeing, all loans under the scheme must be insured,” it stated.
According to the central bank, a charge on land in which the borrower has a legal interest or a right to farm, or a charge on assets on the land, such as fixed assets, crops, or livestock, may be presented to a bank for the purpose of any loan under the system.
It said that the security might include “a charge on the borrower’s movable property; a life assurance policy, a promissory note, or other negotiable security; stocks and shares; a personal guarantee; and any other security acceptable to the bank, which must be adequate and realizable.”
It said that any assets listed on the National Collateral Registry, warehouse receipts, and letters of indemnity from an employer for individuals in paid employment signed by authorized signatories might be used as collateral.
According to the recommendations, banks are not required to demand tangible securities or feasibility reports for loans of N100,000 or less, but there should be a cross-guarantee among members of a group or cooperative, as well as any other guarantee acceptable to the bank.
The fund’s mission, according to the apex bank, is “to provide a guarantee in respect of loans granted by lending banks for agricultural purposes under the scheme with the aim of increasing the level of bank credit to the agricultural sector.”