Unorganised sector needs Nabard-like body

MUMBAI: Empowering those at the bottom of the pyramid could counter the imminent slowdown that is likely to be triggered by the global financial crisis, according to National Commission for Enterprises in the Unorganised Sector (NCEUS) chairperson Arjun Sengupta. The NCEUS has also mooted a separate institution, the National Fund for the Unorganised Sector (Nafus), on the lines of Nabard and Sidbi, which will focus on lending exclusively for the unorganised sector.

Speaking at a seminar on access to finance to the unorganised sector, Mr Sengupta said Nafus could have an initial capital of Rs 500 crore, which could subsequently go up to Rs 1,000 crore. ���The new entity could be in the form of a new organisation or restructuring of existing institutions,��� he said. ���Though banks and micro finance institutions do play a role, there are still difficulties for the weaker sections in availing credit. Helping them with credit facilities for setting up small businesses would in turn help push demand in the economy at a time when a slowdown is imminent... MFIs could be refinanced by Nafus,��� he added.

The NCEUS, in its report submitted to the government recently, has recommended that the priority sector guidelines be revised, providing adequate safety net to the banks, penalty to banks not adhering to priority sector guidelines, strengthening delivery points, strengthening micro-finance, rationalising cost of credit and empowering entrepreneurs.