The Central Bank of Nigeria (CBN) has announced a suspension of all new loan applications under its intervention programme.
This was contained in a circular signed by Sa’ad Hamidu, acting Director of the Development Finance Department and titled “Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria, CBN Development Finance Intervention Programme,” addressed to the Chief Executives of banks.
The suspension represents a significant shift in the CBN’s approach to development finance intervention funds, and marks a strategic change in the bank’s operational focus.
The CBN also directed commercial banks, which previously facilitated the distribution of these intervention loans, with the responsibility of recovering outstanding loans issued under these programmes.
The CBN emphasised its intention to step back from direct involvement in development finance interventions. Instead, the apex bank plans to concentrate on its primary responsibilities surrounding monetary policy, noting that this realignment towards its core mandate will involve transitioning into a more advisory capacity, where it can provide policy guidance that supports broader economic growth objectives.
“Accordingly, the CBN would be moving into more limited policy advisory roles that support economic growth.
“In consideration of the above, the CBN wishes to inform you that it has stopped accepting new loans 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 in their respective approval letters.
“You may also wish to note that your bank shall be responsible for the recovery of the outstanding balance on all facilities previously accessed through your bank.”
The International Monetary Fund (IMF) has in the past, advised the CBN to step back from giving intervention funds because of their effect on the rising inflation rate.
