CBN Warns Against Diversion Of N330bn RSSF Loan | Independent Newspapers Limited
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CBN Warns Against Diversion Of N330bn RSSF Loan

Posted: Mar 28, 2016 at 3:00 am   /   by   /   comments (0)



The Central Bank of Nigeria (CBN) has warned banks against diverting the N300 billion Real Sector Support Facility (RSSF) loan.


The CBN established the RSSF to stimulate growth, enhance value and engender productivity.


But the regulator said some banks, which accessed the funds at one per cent interest rate for lending at nine per cent yearly, are not doing so.


It suspects that some banks are not only diverting the loans, but also delaying the quarterly repayments remittance from beneficiaries.


Part of the guidelines stipulates that banks process and forward requests for the facility from their customers to CBN.


But CBN is worried that many of the lenders are breaching the guidelines, sometimes lending above the stipulated rates.


CBN’s Development Finance Unit (DFU) warned that defaulting banks would be sanctioned based on their level of default.


If a bank is involved in loan diversion, it would be fined at the Monetary Policy Rate (MPR) plus two per cent of the outstanding amount.


For quarterly defaults, the lending bank would be made to repay the amount outstanding in a fortnight, or the CBN would debit it.


Also, the apex bank said it would ensure that all repayments under the facility are amortised and quarterly principal repayments remitted to the Special Intervention Reserve (SIR) Account domiciled at the CBN.


According to CBN Governor, Godwin Emefiele, the RSSF is expected to support large enterprises for start-ups and expansion of the financing of up to N10 billion.


“The real sector activities targeted by the facility are manufacturing, agricultural value chain and selected service sub-sectors. The facility is expected to improve access to finance by Nigerian Small and Medium Enterprises (SMEs) to fast-track the development of the manufacturing, agricultural value chain and services sub-sectors of the Nigerian economy; increase output, generate employment, diversify the revenue base, increase foreign exchange earnings and provide inputs for the industrial sector on a sustainable basis,” he said.


The facility, which banks are accessing from the CBN, is to be channeled towards increasing credit to priority sectors of the economy with sufficient employment capabilities, high growth potential, increase accretion to foreign reserves, expand the industrial base and consequently diversify the economy. The RSSF is also to be used to support start-ups and expansion financing needs of enterprises.


The intervention fund’s objective is to improve access to finance by the agricultural value chain, manufacturing, mining, solid minerals activities and other strategic sub-sectors of the economy.


It is also part of the CBN’s agenda to increase output, create jobs, diversify the economy, increase accretion to foreign reserves and provide inputs for the industrial sector on a sustainable basis.