i nc lu s i ve f i nanc e i nd i a re port 2014
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2.5.1 NABFINS
The NABARD subsidiary called NABFINS, has been
uniquely positioned in a field dominated by NBFC-
MFI models. Basically, NABFINS runs an NBFC-MFI
model that customizes loans and repayment schedules to
respond to the diversity of livelihood situations, thereby
balancing ‘business with inclusion in growth’, being
focused on the poor and marginalized. It seeks to bring
about financial inclusion in a sustained way, with sup-
port from a variety of institutions in building skills of the
poor. It also invests, at the expense of its own profits, in
interventions that require investment to develop a net-
work and support system for pro-poor.
Karnataka Agriculture Finance Company Limited
(KADFC) was restructured to form an NBFC-MFI
called NABARD Financial Services Limited (NABFINS)
in 2008. NABARD is the major stakeholder with 68
per cent of shares and Canara Bank, Union Bank,
Dhanalakshmi Bank and Federal Bank are the other
stakeholders. The main aim of NABFINS is to support
sustainable livelihood strategies of the poor and
marginalized and to promote peoples’ institutions at
the primary and secondary levels. NABFINS envisages
providing adequate, timely, flexible and hassle-free
credit at the door step of households. Predominantly,
NABFINS extends loans to SHGs, producer collectives
and first generation microenterprises.
NABFINS uses NGOs and people’s own institutions
[such as the Community Management Resource Centers
(CMRCs) of MYRADA] as Business and Development
Correspondents (B&DCs) for providing credit services
at the door step of the beneficiaries for which they receive
2 per cent commission. As the name suggests, B&DCs
also facilitate in improving the capacities of SHGs and
also ensure convergence and delivery of various devel-
opment programs in addition to credit linkage. Staff of
NABFINS takes up loan assessment, disbursement and
periodic monitoring, while B&DCs take up collection,
monthly monitoring and capacity building of SHGs. All
the costs such as commission paid to B&Cs, insurance/
risk mitigation and training costs of B&DCs are taken
up by NABFINS. The repayment period is flexible and
customized repayments aligned to the harvest period are
allowed.
NABFINS also extends credit to collectives which
are secondary institutions supporting members in
value addition, aggregation and marketing of produce.
NABFINS has taken the support of Rabobank, HDFC
and Small Farmers Agri Business Consortium (SFABC)
for providing guarantees to loans taken by producer
collectives. As a business model which promotes develop-
ment finance, it levies interest at reasonable rates and
also ensures that overall cost to the client remains low
by providing doorstep services and quick turnaround.
NABFINS and the SBLP are not in conflict, but offer the
client a choice.
B
OX
2.5
Experience of Women Bank Sakhis in
Hill Areas
Currently, approximately 150 such women CSPs have been
identified and training provided by Sewa Bharat. CSPs from
among the community enjoy a good rapport and trust and
respect of fellow community members. Women CSPs have
benefitted from this work opportunity, learning new skills
and earning incomes where previously they were mostly
unpaid farm labour on their own land.
Nevertheless, women service providers implementing
the SEWA-SBI model revealed that they would want to
receive a basic salary rather than be paid on performance-
related commissions and incentives. On an average, CSPs
open approximately 50 accounts in a month, earning only
Rs. 15 as commission for every account opened (i.e. Rs.
750 per month). This was particularly glaring since women
CSPs had to travel large distances on foot, up to 15-20km,
from door-to-door to enroll members and attend to their
calls for deposits/ withdrawals. It was suggested by the Lead
District Manager, Lead Bank Office, Almora district, that a
woman CSP could be paid Rs. 4,000 a month as fixed salary;
over and above this incentives could be given, amounting to
Rs. 6,000.
Further, CSPs maintained that they remained scared
that they would be are attacked or robbed when travelling
on foot and with money on their person, and that therefore
some provision for addressing cash handling risks and
travel arrangements/ allowance should be provided. On
occasion to maintain the ‘trust’ of community members,
when faced with technological hurdles or shortages in cash
liquidity related to working capital limit, the CSPs always
treated the customer’s financial needs on priority, even if
this meant advancing the money from their own earnings
to community women.
Source
: Tankha (2014)
