State govt rolls out ambitious financial inclusion initiatives

Morung Express News
Chümoukedima | September 21

In a significant initiative aimed at invigorating its economy, the Nagaland government unveiled the Annual Credit Plan for the fiscal year 2024-25. This ambitious plan proposes to nearly double the credit flow to priority sectors, increasing the allocation from Rs 1,058 crore to Rs 2,003 crore, with a strong focus on agriculture and small enterprises. 

The financial inclusion plan was launched by Chief Minister Neiphiu Rio at the Nagaland Credit Empowerment Summit hosted by the state government on September 20 in Chümoukedima. According to a media handout, the increase is designed to channel financial resources into sectors that are crucial for development, addressing a longstanding gap in funding availability.

Focus on entrepreneur growth 
Among the most notable features of the plan is what was said to be an increase in credit flow targeted specifically at entrepreneurship. The allocation for micro, small, and medium enterprises (MSMEs) increased from Rs 340 crore to Rs 1,137 crore. 

In a bid to alleviate barriers for entrepreneurs, the government introduced the State Sponsored Collateral-Free Coverage initiative, allowing loans of up to Rs 50 lakh per beneficiary through Credit Guarantee Trust for Micro Small Enterprises (CGTMSE) without requiring third-party collateral. The program aims to reduce the financial risks faced by banks, encouraging them to lend more freely.

Revisions to CMMFI
The Chief Minister’s Micro Finance Initiative (CMMFI) has also been revised to improve fund flow and accessibility for beneficiaries. The updated policy includes provisions aimed at supporting marginalised groups, such as unemployed youth and differently-abled individuals. To date, the scheme is said to have benefited 929 individuals, with an additional 980 applications under review.

Local tracking & monitoring 
A key component of the new plan is the launch of a Loan Tracking and Monitoring website, which allows beneficiaries to apply for loans online and generate detailed project reports necessary for loan approval. This portal also features the provision for public to generate their Detailed Project Report (DPR) for submission to banks, designed in line with the basic framework for MUDRA loans, which provide financial support and credit to micro and small enterprises. To ensure effective implementation and monitoring of these initiatives, a dedicated cell has been established within the Finance Department.

Support through local coordination
Additionally, Credit Managers and Coordinators will be deployed in each district under the Swavalamban Connect Kendras initiative. This collaboration with the Small Industries Development Bank of India (SIDBI) aims to provide end-to-end support to entrepreneurs, offering guidance on loan applications and entrepreneurship training. The government is also fostering partnerships with private vendors, such as Tata Motors, which has pledged a 12% discount on agricultural marketing trucks procured under the CMMFI.

Digital piggery insurance scheme
As part of its commitment to enhancing livelihoods, the state is introducing a Digital Piggery Insurance Scheme with TataAIG, to provide hassle-free insurance coverage for piggery operators. This initiative is expected to mitigate financial losses due to unforeseen circumstances.

The handout said that the modalities are finalised with Finance Department, Nagaland State Rural Livelihood Mission (NSRLM) and Department of Veterinary & Animal Husbandry. The insurance will be provided at beneficiary door step and the same for claim processing. The insurance premium will be Rs 1557 per pig for coverage of Rs 22,000.

Accidental insurance for police personnel 
In addition, the government has introduced a new insurance programme aimed at safeguarding its police personnel and improving health access for residents. The Accidental Insurance for Police Personnel coverage provides critical protection for the police force, ensuring their well-being and financial security in the event of accidental death or disability. In case of accidental death or full disability, the family will receive an insurance amount of Rs 75 lakh, for partial disability, Rs 55 lakh.

NPAs situation not as bad as assumed
Addressing a press conference after the summit, Nagaland Chief Secretary, J Alam said the event was attended by bankers, representatives of financial institutions, insurance companies and businesses, besides business associations of the state. The Chief Secretary termed the summit as a “fruitful discussion” with the state government highlighting to the bankers certain “areas of concern.”  

Concerns included increasing the credit ratio of Nagaland at least at bar with the national average, with the state government urging the banks to extend credit facilities to at least 1000 educational loans and 2000 skill based loans and increasing banking footprint or branches across the state. 

The Chief Secretary highlighted issues raised by the bankers including Non Performing Assets (NPAs) or defaulting on loans by borrowers. With the CGTMSE, he said that the concerns of the banks will be addressed to a great extent. Another was lack of available infrastructure in remotes places for opening branches.  

Finance Commissioner, Sentiyanger Imchen, maintained that the day’s summit did not go into the nitty-gritty of the NPAs, a perennial issue in Nagaland. However, he revealed what the bankers said was a higher incidence of NPAs in Central government sponsored schemes like the PMEGP. “Otherwise it’s not an alarming situation,” he claimed. 

“Banks are not willing to lend out to the public. And, they always say that people (borrowers) are not in the habit of repaying loans. But, then what we have seen in fact is that the NPA percentage of the state is not that high. Actually this is the report of the RBI,” Imchen said. He added that any loan turned bad will have the cover of the CGTMSE, which provides coverage up to 85-90 percent of the loan.