The Central Bank of Nigeria (CBN) has suspended new loan applications under its development finance intervention funds, as announced in a circular addressed to bank Chief Executives by Sa’ad Hamidu, the Acting Director of the Development Finance Department.
The circular reveals that the CBN is retracting from direct development financing interventions, shifting the responsibility of recovering loans granted under the intervention funds to the banks.
Although CBN Governor Olayemi Cardoso mentioned total disbursements of N10 trillion under the development finance intervention, specific details about the unrecovered amount were not provided.
Industry observers estimate the outstanding amount of unrecovered development finance loans under the Anchor Borrower Program alone to be over N580 billion.
Following the recent circular, commercial banks that facilitated the loan disbursals will now be tasked with the responsibility of loan recovery.
Titled “Suspension of Acceptance of New Applications under the Existing Central Bank of Nigeria (CBN) Development Finance Intervention Programme,” the circular outlines the CBN’s strategic shift towards limited policy advisory roles focused on ensuring price and monetary stability.
The circular emphasizes the suspension of new loan applications under existing intervention programs and schemes, urging banks to inform their customers of this development.
Additionally, it states that the interest rates and other terms and conditions on existing facilities will remain unchanged, with banks taking on the responsibility of recovering outstanding balances on previously accessed facilities.
In response to reports suggesting that some licensed commercial banks in Nigeria had failed the CBN’s Capital Adequacy Ratio (CAR) for international authorization, the CBN issued a statement assuring that the Nigerian banking industry remains resilient.
The statement, signed by Mrs. Sidi Ali Hakama, the Acting Director of the Corporate Communications Department at CBN, clarifies that key financial soundness indicators are within regulatory thresholds, as reported in the CBN’s most recent Economic Report of 2023.