CBN Announces The Suspension of New Loan Applications Under Its Intervention Program
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The Central Bank of Nigeria (CBN), has announced the suspension of new loan applications under its Intervention Program.
The apex bank announced this decision in a circular, stating that it has commenced a pullback from direct development financing interventions, adding that the banks are now responsible for the recovery of loans granted so far under the development finance intervention funds.
The circular titled “Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria, CBN Development Finance Intervention Programme” reads,
“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 loan applications for processing under any of its existing intervention programs 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.”
Following the details of the circular, the commercial banks through which the loans were disbursed will now carry the burden of the loan recovery. 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.
CBN’s suspension of new loan applications is coming after the International Monetary Fund (IMF), had urged that the central bank of Nigeria stop its intervention policies in the economy amidst the rising inflation rate.
The IMF further recommended that the CBN not only wind down the loans to the federal government, but also support packaging the loans as bonds which the debt management office claims is in the offing.
