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Claims Settlement Activities
The Managing Agent of the Agricultural Credit Guarantee Scheme Fund (ACGSF), the CBN undertakes investigation with a view to determining the status of the default claims submitted by lending banks, and making appropriate recommendations to the Board of Agricultural Credit Guarantee Scheme Fund (ACGSF) for settlement.
Claims settlement is central to the sustenance of the Agricultural Credit Guarantee Scheme, in that banks look forward to the payment of the 75% of the amount in default net of the amount realized from the security pledged as enshrined in the Guidelines.
From inception to September 2006, a total of 17,693 claims valued N461.0 million were filed on the Fund. Out of these, 8,680 claims with a value of N174.12 million which represents 49.06% of the number and 37.78% of the value of the claims filed have been settled. Out of 9,013 outstanding claims valued ^286.88 million, 8, 112 or 90% valued ^136.70 or 47% were found to be later fully repaid by the borrowers before the could be processed for settlement by the Fund. The reasons for non settlement of the outstanding 901 claims rage from improper documentation to litigation and duplication of applications.
Nevertheless a claims settlement rate of 49.06% and 37.78% in number and value respectively, indicates that the Scheme is responsive to the demands of lending banks. However, it also indicates that the factors militating against prompt and full settlement of claims are enormous and need to be tackled forthrightly.
A cursory look at the consolidated statistics in table 1 below reveals the trend of activities from inception of the Scheme in 1978.
From inception of the scheme to the 1990’s, there was a high incidence of request for claims settlement following high default rate, and indicating that this period was a learning period for bank lending to the agricultural sector.
In the last two years, claims filed on the Fund have reduced remarkably. This can be traced to the introduction of the Interest Drawback Programme (IDP) which has made customers repay their loans on a timely basis.
Cumulative Statistics On ACGSF Claims Settled
|Year||Claims Filed||Claims Settled|
|No.||Amount ('000 Naira)||No.||Amount ('000 Naira)|
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