The Central Bank of Nigeria (CBN) has threatened that borrowers who divert the funds provided under the Agricultural Credit Guarantee Scheme may earn a five-year jail term.
The CBN said this in a report titled ‘Guidelines for the Agricultural Credit Guarantee Scheme’, released last week.
The apex bank emphasized that it’s an offense to obtain a loan and not apply it to the purpose for which it was obtained.
“Banks should remind prospective borrowers under the scheme that it is an offence for which one may be imprisoned for five years to apply the loan for purposes other than those for which they are given,” the bank said.
The CBN explained that the maximum liability of the fund in respect of any guarantee given under the scheme would be fixed from time to time by the ACGSF board.
According to it, the single obligor limit for non-tangible collateral is N100,000 while the obligor limit for individual, group/co-operative or a corporate society is N50m for secured loans.
It said the liability of the fund would be 75 per cent of the amount in default, net of any amount realised by the bank from the security it got from the borrower, subject, in the case of a loan to an individual, a co-operative society or a corporate body, to a maximum of N50m. The central bank said the revised r