Centre likely to raise authorised fund in NSFDC by Rs 1,000 crore

The Centre is contemplating increasing authorised share capital of the National Scheduled Castes Finance and Development Corporation (NSFDC) by Rs 1,000 crore to Rs 2,500 Crore.

The Department of Social Justice, the nodal authority, has floated a draft cabinet note for inter-ministerial consultation.

“We expect that the proposal would be accepted by the end of the financial year. With the upcoming elections, we expect a larger capital infusion from the government in the next year’s Budget,” an NSFDC official said under condition of anonymity.

If the Cabinet approves the proposal, it will expand the pool of funds available for economic activities and will lead to better coverage and enhanced outreach by NSFDC.

NSFDC is engaged in providing financial assistance at concessional interest rates under various credit-based schemes to beneficiaries belonging to Scheduled Castes through the state channelising agencies (SCAs). In FY22, NSFDC disbursed loans worth Rs 572 crore and is targeting to disburse Rs 900 crore loans in FY23. The company recorded a net profit of Rs 47.8 crore in FY21.

“There is a need for increasing the authorised share capital as the paid-up capital has already reached the level of authorised share capital. The company cannot expect more capitalisation from the government through budgetary allocation, unless its authorised share capital is increased,” the official said.

The Centre has allocated Rs 50 crore for FY23 in the Budget, which would not be successful unless the authorised share capital is raised. The last time the Centre infused capital of Rs 14.6 crore was in FY20.

“The CPSE has been facing problems in disbursal of loans as there is no fresh capital infusion by the government and we have been relying on recovery from the existing loans for fresh disbursals,” the official said.

The disbursements by the development financial institution is mainly towards the micro-credit finance scheme, Mahila Samriddhi Yojana, Stand-Up India scheme, Laghu Vyavasay Yojana, and educational loans. These schemes act as a catalyst in systematic reduction of poverty through socio-economic development of Scheduled Castes.

“The proposal for raising the authorised share capital has been under consideration for the last two fiscal years, but has been delayed due to a stance by sections in the government that the organisation should raise capital from the market. Raising money from the market is a costly affair and is not feasible as the organization provides loans at concessional rates to the beneficiaries,” the official said.