Central bank makes insurance cover mandatory for projects funded under commercial agricultural lending scheme

In other to mitigate the risk faced by participating financial institutions in financing agricultural sector, Nigeria’s central bank has revised and amended guidelines of the commercial agricultural credit scheme (CACS) to include compulsory insurance cover for all agricultural facilities and projects under the scheme.

In a circular to all banks dated July 15 and signed by Kevin Amugo, director, financial policy and regulation department, the CBN indicated that the insurance cover must be underwritten and provided by the Nigeria Agricultural Insurance Corporation (NAIC).

The revision and amendments specifically affected sections 16 and 17 of the guidelines, which specified key stakeholders of the scheme and their responsibilities.

To this end, the CBN has directed the immediate commencement of issuance of premium payments by borrowers under the scheme.

Analysts say the development is welcoming as it would mitigate associated risk of banks and encourage appropriate disbursement of funds.