In yet another move aimed at strengthening its ties with the minorities, the Centre is working towards overhauling the functioning of the National Minorities Development and Finance Corporation (NMDFC) — set up in 1994 to provide a special focus to economic development of minorities — on professional lines. NMDFC, which gives concessional finance to the minorities living below double the poverty line for self-employment, has been plagued by a slew of problems like dismal recovery of loans in many states, severe staff shortage as well as administrative and operational troubles. With a view to professionalise the corporation, Minister for Minority Affairs A R Antulay spoke to HDFC chairman Deepak Parekh recently seeking his suggestions to rev up the NMDFC.‘‘NMDFC, though committed to a social cause, operates on the same principles as any banking institution in the country. So there is no reason why it should not be manned more professionally. This will ultimately help more needy minority community members,’’ Antulay said.Confirming the move, Parekh told The Indian Express: ‘‘The Minister spoke to me on this issue, but we are yet to hold a meeting.’’ The problems are many for the NMFDC, which has an authorised share capital of Rs 650 crore. Most worrying of all is the dismal loan recovery figures from many states which threaten the very viability of the agency.While officials say loan recovery should be at least 80 per cent for maintaining viable operations, recovery in several states is nowhere near that figure. For instance, the recovery from Manipur is 6.8 per cent, Orissa is just 28.68 per cent, Assam 34.87 per cent, Madhya Pradesh 59 per cent (see table). This was also emphasised by the Parliamentary Standing Committee for 2005-2006 headed by Sumitra Mahajan. The lending rate is another area of concern — while the NMFDC provides funds to the channelising agencies, mainly state-run agencies and NGOs, at 1 to 3 per cent, the ultimate benificiaries have to pay 5 to 6 per cent interest (up to a limit of Rs 5 lakh). Though the difference in interest rate is meant for running the agencies, the parliamentary panel feels they don’t need so much money. Targeting of self-employment schemes is also tricky as there is no clear data on people ‘‘living below double the poverty line’’. Another major hurdle for minorities striving to access the corporation’s funds is that any loan over Rs 10,000 needs a guarantor who is a government employee. Many minority community members cannot get one. The standing committee had recommended that this requirement must be done away with and any Income-Tax payer could become a guarantor. If Parekh decides to lend his expertise to the corporation, several other inefficiencies could also be removed. For instance, a fundamental problem that would be unacceptable in any banking set up, is that disbursement information is not up to date. Officials say the time lags in transmitting lending data runs into months at times. This, as Mr Parekh would know, would simply not do.
