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An RTI response has revealed that at least one non-banking financial company (NBFC) client of the National Bank for Agriculture and Rural Development (NABARD) has been classified as a non-performing account.
This client has been identified as Reliance Commercial Finance Ltd, against which NABARD has estimated an aggregate principal outstanding of ₹1,107.50 crore, the RTI response said.
Reliance Commercial Finance apart, there have been no overdue accounts in default in its NBFC financing history of the past 10 years, NABARD said in response to a query seeking item-wise details of technical defaulters. Neither has any case of re-schedulement of finance been resorted to during this period, the response said.
NPAs on the balance-sheet
The RTI response also gave out the item-wise details of amounts invested, dates of investment, maturity dates, and the current market value with respect to NABARD’s investments in NBFCs. The organisation’s unaudited financial results for the third quarter and nine months ended December 31, 2019, showed net NPAs of ₹719.88 crore (0.17 per cent of net loans and advances).
It may be recalled that NABARD has set up a Strategic Planning and Product Innovation Department with effect from January 1, 2020, to “bring in innovation in existing products and also launch innovative new products in tune with fast-changing financial sector landscape, changing clientele needs and the emerging rural landscape”.
This is expected to further boost its drive to “use private sector finance knowledge and deep sovereign relations of NABARD to deliver innovative products and solutions to effectively respond to clients’ needs and expand collaboration with new and emerging partnerships with corporate and philanthropic foundations.”
Shiv Sena criticises move
Finance Minister Nirmala Sitharaman, in the latest Budget, put forth a proposal to expand the NABARD refinance scheme to cover NBFCs and co-operatives active in agriculture lending. Sitharaman said the agricultural credit target for 2020-21 has been proposed at ₹15-lakh crore.
Shiv Sena leader and the Maharashtra government’s farm panel chief chief Kishore Tiwari criticised the proposal to expand the refinance scheme for NBFCs, saying it would only lead to the ‘bypassing’ of RBI-regulated state-run banks. The agricultural credit target of ₹15-lakh crore is another scam, he had alleged.
NBFCs’ attempt to use NABARD for providing funding to all agri-related activities, and for rural development, at the expense of state-run banks is an ill-motivated move by the Finance Minister, as NBFCs are privately owned and controlled by corrupt politicians, Tiwari said in a statement.
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