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Mumbai, Nov 4 : State-run National Bank for Agriculture and Rural Development (Nabard), which has played a major role in the implementation of Rs 71,000-crore debt waiver scheme, has proposed a multi pronged strategy to reposition itself in the changing economic scenario.
Nabard proposes to set up a direct financing subsidiary, develop infrastructure delivery as independent business and link various development initiatives to generate business in a credit plus approach. It also plans to set up an independent supervisory board, as at present, 89 of the 402 cooperative banks are licensed. Further, it proposes to segragate Nabcons (Nabard Consultancy) as an independent subsidiary. Nabard may hive off Nabcons as an independent subsidiary once the gross income touches Rs 40 crore.
In a bid to cash in on the opportunities in the burgeoning micro finance business, Nabard proposes to set up independent micro finance and financial inclusion units. It has sought the support of the Centre and the RBI for raising affordable funds for state governments and other stake holders.
“The direct financing subsidiary is under consideration as ground level credit flow is expected to grow from Rs 1,96,000 crore in 2008 to Rs 11,17,000 crore by 2018. It will explore the option of direct finance area based projects by creating or taking over branch network. Besides area-based projects, Nabard can also finance value chains and venture capital financing,”Nabard sources told FE on Monday. Nabard has realised that its capacity to influence the direction of rural credit is getting marginalised and thus, in a bid to focuss its attention, it proposes to set up the refinance unit as an independent unit. Nabard would need a dedicated fund to support at at least 35% of its operations—Rs 28,000 crore by 2018.
Nabard sources said it would like to have an access to the sources of cost-effective funds like India Infrastructure Finance Company and also, a position to procure bilateral/multilateral funding agency loans. The ogganisation is ready to negotiate MoUs with various infrastructure funding agencies such as KfW, JBIC, ADB, World Bank, IDFC, IL&FS, ITC Agro, Mahindra.
At present, Nabard plays a major role in the implementation of various infrastructure projects under the Rural Infrastructure Development Fund (RIDF). Nabard plans to float a special purpose vehicle to fulfil narrow, temporary or specific objectives, primarily to isolate financial issues, project risks or fund raising limitations. For infrastructure, it could be a SPV for an area development programme with different components or a SPV dedicated to a single project. The ownership has to be in a predetermined ratio between a mix of public and private stakeholders. This is to keep out their respective weaknesses, and to allocate risks according to their respective core strengths.
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