Volume 1 Issue 1 - December 25, 2011
NHFDC collaborates with commercial banks for easy loans
To enable self-employment for the socio-economic development of aspiring disabled entrepreneurs, National Handicapped Finance and Development Corporation (NHFDC) was set up in 1997 as a state-owned non-profit organisation with an authorised capital of Rs 400 crore to provide financing schemes.
There were very high hopes from this institution. Disabled people thought they would now be able to get loans at low interest rates. At first, it took the government a very long time to set up the channelising agencies. Then these agencies refused to perform. Disabled people, meanwhile, kept running from the proverbial pillar to post and their aspirations remained just that – aspirations!
Things seem to be improving. The government first entered into a partnership with NGOs with an innovative micro-finance scheme, but the problem there was that a borrower could avail a loan worth Rs 25,000 only.
NHFDC Chairman and Managing Director H C Mahajan, in a candid interview with Sudeshna Banerjee admits to the problems NHFDC has faced and throws light on his constant endeavour to improve things.
The most exciting discovery this interview made is that NHFDC is now tying up with commercial banks. This step is likely to revolutionise things for people with disabilities, vis-à-vis self-employment.
Q: What has been the role of NHFDC in helping aspiring disabled entrepreneurs?
Ever since 1981 was celebrated as the international year of disability, government as well as Non Government Organisations (NGOs) came forward to empower disabled people. That involved early detection of disability, treatment, special education, vocational training, employment and entrepreneurship, thus building their confidence and getting them suitably integrated into the mainstream society.
It was decided that there should be systematic effort on the part of central government as well as state government to see that disabled people are benefited through self-employment schemes.
NHFDC was started in 1997 to provide funding schemes with very low interest rates. For a loan up to Rs 50,000, only 5 per cent interest rate is charged to a male borrower and only 4 per cent interest rate is charged to a female borrower. For loans beyond 50,000 up to 5 lakh, only 6 per cent is charged to a male borrower and only 5 per cent is charged to a female borrower, unlike the market rate of 12 per cent, charged by commercial banks.
The idea is to assist a range of income generating activities like small business or trading, setting up small-scale industry, higher studies or professional training, agricultural activities, manufacturing or production of assistive devices for disabled people, create cooperative societies, self employment facilities for people with mental retardation, cerebral palsy and autism.
Q: What are the new schemes available today?
Earlier, only term loans were available to disabled borrowers through state channelising agencies, nominated by the state government. Then we realised that many poor disabled people living in far-flung, rural areas often don’t feel confident enough to approach state government channelising agencies. So we implemented a micro-finance scheme, which is implemented through non-government organisations. Under this scheme, a borrower can get up to Rs 25,000. The loan limit for an NGO is Rs 5 lakh.
The NGO doesn’t have to pay any guarantee. We give them total finance.
Q:What kind of progress has NHFDC made since its inception?
Although the corporation was set up in January 1997, the first loan was disbursed in March 1998. During that year loans worth only Rs 25 lakh could be disbursed. During 1998-99, the disbursement went up to Rs 93 lakh; during 1999-2000, it went up to 5.76 crore; during 2000-2001, it was 11.80 crore; during 2001-2002, 12.84 crore was disbursed and in 2002-2003, disbursement went up to 18. 41 crore.
Our growth in terms of money was 40 per cent against the last fiscal and a growth of 50 per cent in terms of the number of beneficiaries.
The credit goes to micro-finance schemes, which have been quite successful.
So far 69 NGOs have disbursed loans worth Rs 146 lakh under micro-finance schemes to about 1700 beneficiaries. Two third of these NGOs are only from three states. Out of 69 NGOs, 22 are from Andhra Pradesh, 13 from Tamil Nadu and 10 from West Bengal. They have been extremely active in processing micro-finance schemes to disabled borrowers.
Q: State-wise, how many people have benefited from NHFDC loans during 2002-2003?
Last fiscal, 4464 people have benefited from NHFDC loans in India.
State-wise, in Andhra Pradesh we disbursed Rs 51 lakh; in Chandigarh Rs 3 lakh; in Chattigarh Rs 15 lakh; in Delhi Rs 1.8 lakh; in Gujarat Rs 89 lakh; in Haryana Rs 235 lakh; in Himachal Pradesh Rs 49 lakh; in Jammu and Kashmir Rs 5 lakh; in Karnataka Rs 106 lakh; in Kerala Rs 202 lakh; in Lakshadweep Rs 5 lakh; in Madhya Pradesh Rs 160 lakh; in Maharashtra Rs 115 lakh; in Nagaland Rs 114 lakh; in Orissa Rs 214 lakh; in Pondicherry Rs 149 lakh; in Punjab Rs 3 lakh; Rajasthan Rs 164 lakh; in Tamil Nadu Rs 37 lakh; in Tripura Rs 14 lakh; in Uttar Pradesh Rs 1 lakh; in West Bengal Rs 105 lakh.
In spite of being a small state, Pondicherry is doing very well.
Q: Why has Uttar Pradesh, despite being a fairly large state, fared so poorly?
In Uttar Pradesh, the state government nominated agencies have not processed a single application. Although four channelising agencies have been nominated, they are just not functioning! There is lack of support from the state government too. The state hasn’t given government guarantees either. Only NGOs have cooperated through micro-finance scheme.
Punjab is facing similar problems. Only NGOs are active in these states. Bihar and Assam have the worst scenarios. No loan has been disbursed last year in these states.
Q: Isn’t there any provision for monitoring the work of the channelising agencies, or hold them accountable for not functioning? It has also been found often the actual needy face harassments and is asked to pay bribes to process a loan. What is NHFDC’s stand in redressing such grievances?
Channelising agencies, in most cases, are government undertakings or government departments. NHFDC is itself a central government undertaking. If any case comes to our notice, it is directed to the respective state government for suitable action against the channelising agency.
However, we are trying to address this issue in a different way too. Since we have to depend on the state government for everything, we are now planning to create advisory committees to look into this issue.
We are trying to mobilise disability activists and NGOs to come forward, identify borrowers and monitor the funding of channelising agencies.
We are talking to research students of social work too. In fact, we are forming state-level advisory committees, wherein in every state there will be quarterly meetings to monitor the benefits of NHFDC funding schemes.
Q: There are very few channelising agencies per state and even fewer ones are active. For a disabled person, living in a rural area of a state or even a far-flung district, access is a big problem. Are you looking at any possible alternative?
Yes, I agree. Out of 47 channelising agencies, only 28 agencies are active.
Unfortunately, channelising agencies are effective only in six states – Rajasthan, Haryana, Orissa, Gujarat, Madhya Pradesh and Kerala. Pondicherry, seeing its size, has done fairly well. It has a good administrative unit.
Moreover, for a wider reach, we are now partnering with commercial banks, which have branches everywhere. These banks will work like Industrial Development Bank of India (IDBI) or Small Industries Development Bank of India (SIDBI) in processing loans. We have already finalised an agreement with Punjab and Sindh Bank. They have already advertised for applications. We are in the process of collaborating with Oriental Bank of Commerce.
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