CBN To Give Single Digit Interest Loan To Agricultural, Manufacturing Companies

The Central Bank of Nigeria (CBN) says it will support banks to enable them give single digit interest loans to agricultural and manufacturing companies.

Briefing newsmen shortly after the CBN Bankers’ Committee meeting, on Thursday, Ahmed Abdullahi, CBN Director, Banking Supervision, said the loans will only be available for job creation and expansion plans.

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“The idea is to have job-creating activities in the economy and also to bring interest rates down within the economy,” he said.

“Although agriculture and manufacturing are the initial sectors that are being considered, a bank can apply if there is a job-creating sector that the bank is operating in, it may be considered. The whole idea is: bring down interest rates, create jobs.

“For CRR refund, that is part of the idea. At the moment, banks funds are held under CRR and they are not being used.

“The idea came up that we can refund the CRR to a bank that has engaged in lending for a new project or for the expansion of an existing one in the agricultural or manufacturing sector as a way of utilizing the CRR.

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“Anytime a bank lends to manufacturing or agricultural business at a rate that the CBN has prescribed, it will have its CRR refunded to it, up to the amount that it has lent.”

Reacting to the development, Yemisi Edun, Executive Director, Finance at First City Monument Bank (FCMB), described the directive as a positive for the economy.

“This is very positive for the economy and also positive for banks because the banks will be able to access these funds and be able to earn on it. It will be coming as single-digit rate then it will be positive for the economy.”

On his part, Segun Agbaje, Managing Director, Guaranty Trust Bank, said the loans will be for seven years with a two-year moratorium.

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