The Central Bank of Nigeria (CBN) has unveiled incentives for deposit money banks who lend to the real sector of the economy, especially manufacturing and agriculture.
Recall that the CBN Monetary Policy Committee (MPC), at its 119th meeting held on July 23 and 24, 2018, introduced its revised guidelines for accessing Real Sector Support Facility (RSSDF) through Cash Reserves Requirement (CRR)/Corporate Bonds (CBs).
In a statement the acting Director of Corporate Communications, Mr Isaac Okorafor yesterday, CBN said it hopes to achieve the flow of credit to the real sector of the economy as Deposit Money Banks (DMBs) would be incentivized to direct affordable, long-term bank credit to the manufacturing, agriculture, and other sectors to stimulate employment and growth.
Mr Okorafor disclosed that Corporate/Triple-A rated companies would be encouraged to issue long-term Corporate Bonds (CBs), saying CB Funding Programme is now in place.
The programme involves investment by CBN and the public in CBs issued by corporates subject to the intensified transparency requirements for participating corporates.
The bank now has a Differentiated Cash Reserves Requirement (DCRR) Regime whereby DMBs interested in providing Credit Financing to greenfield (new) and brownfield (expansion) projects in the real sector (Agriculture and Manufacturing) could request for the release of funds from their Cash Reserves Requirement (CRR) to finance the projects; subject to DMBs providing verifiable evidence that the funds shall be directed at the approved projects by the CBN.
The tenor for the Differentiated CRR would be a minimum of seven years with a two-year moratorium.
For the CBs programme, Okoroafor said the tenor and the moratorium would be specified in the prospectus by the issuing corporate.
He added that the maximum facility shall be N10 billion per project and facilities are to be administered at an all-in Interest rate/charge of nine per cent per annum.