Interest Draw Back

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The Interest Drawback Programme (IDP) was developed as an interest rate management framework under the ACGSF to reduce effective borrowing rates without the complication of introducing dual interest rate regime or contradicting the existing deregulation policy of the government.

Under the IDP, farmers will borrow from lending banks at market-determined rates but the Programme will provide interest rebate of a determined percentage to them where the loans are repaid as and when due. The conditions for benefiting from the interest rebate are stated in the Guidelines.

The IDP has an authorised capital fund of about N2.0 billion. The IDP is funded jointly by the Federal Government of Nigeria and the Central Bank of Nigeria in the ratio of 60:40. It is regarded as a dedicated fund for interest drawback on agricultural loans or IDP Fund and separated from the ACGSF capital.

A trend analysis of the loan repayment performance of the ACGSF over the years shows that the IDP has impacted positively on the operations of the Scheme as it induced clients to repay on time.