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The Trust Fund Model

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The Trust Fund Model is a framework for enhancing credit supply to the agricultural and rural sectors of the economy. Under the Model, oil companies, State/Local Governments and Non Governmental Organizations (NGOs) place funds in trust with lending banks to augment the small group-savings of the farmers as security for agricultural loans.

The Trust Fund secures 25% or more of the intended loans of the prospective borrowers, the farmers’ savings secure another 25% while the ACGSF guarantees 75% of the remaining 50%, thereby leaving the lending bank with a risk exposure of only 12.5%. Sometimes, the state government, taking cognisance of the low capacity of the poor farmers in the state, may decide to increase its stake beyond 25% in order to assist the peasant farmers who may be unable to muster sufficient savings to qualify for a meaningful amount of loan.

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Facts : 7/1/1959
BOARD OF DIRECTORS:The Management of the CBN is placed under a Board of Directors which is responsible for the Policy and General administration of the Affairs and Business of the Bank.Under the original statute,the Board was composed of the Governor as Chairman,a Deputy Governor and Five other Directors all of whom were appointed by the Federal Government.
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