The Hindu Business Line : Nabard, SIDBI oppose national fund for unorganised sector

Mumbai, Oct. 19 The National Bank for Agriculture and Rural Development (Nabard) and Small Industries Development Bank of India (SIDBI) want the funds for micro enterprises in the unorganised sector routed through these institutions rather than a newly set up entity.

It was earlier proposed by the National Commission for Enterprises in the Unorganised Sector (NCEUS), led by Dr Arjun Sengupta, to set up a separate entity called National Fund for the Unorganised Sector (NAFUS).

The report submitted to the Government is awaiting Cabinet approval. NAFUS’s primary focus would be on non-farm micro enterprises with investment of less than Rs 5 lakh.

Officials from Nabard and SIDBI voiced their views at a seminar on ‘Access to Finance for Enterprises in the Unorganised Sector’ organised by IGIDR and NCEUS. “If a new entity is set up, it will take a few years for the entity to be fully operational. It is better to use the existing institutions for the disbursal of funds,” said Mr C.K. Gopalakrishna, Chief General Manager, Nabard.

Capital proposal

NCEUS has proposed a start-up capital of Rs 500 crore for NAFUS, which can be further increased to Rs 1,000 crore, said Dr Arjun Sengupta, Chairman, NCEUS.

The purpose of NAFUS is to lend to the unorganised sector primarily for productive purposes, rather than consumption purposes, said Mr Sengupta.

Disbursal of funds could take place either through a new organisation or through existing institutions. It is possible that existing institutions can help in capacity building of the unorganised sector, said Mr Sengupta.

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