Nabard is shortlisting start-ups, first deal in 2 months: Harsh Bhanwala

Start-ups have approached us, and we are in the process of identifying them based on their innovation, he said

Nabventures, a Rs 500-crore venture capital fund launched by the National Bank for Agriculture and Rural Development (Nabard), is shortlisting start-ups for investment. It plans to do its first deal in a month or two, said the bank’s Chairman Harsh Bhanwala. He told Dilasha Seth in an interview that the bank will raise Rs 55,000 crore from the market this year to fund business and support government projects in the agriculture and rural sector. Edited excerpts:

The government has made significant allocation to the agricultural sector in the Budget. What are the areas that the government must focus on?
 

This was required. About70 per cent of population and 40 per cent value addition comes from there. If you are thinking of enhancing your gross domestic product (GDP) growth, your consumption needs to grow, of which 40-45 per cent comes from rural areas. This requires labour rates and farmers’ income to go up. This necessitates that there is a larger participation from small and marginal farmers and women also. They have not yet fully contributed to the GDP share yet.

How much funds do you plan to raise this year? Have you identified the government projects you will fund?

We plan to raise around Rs 55,000 crore this year, almost the same as last year. Last year, we raised Rs 56,000 crore. We are in process of identifying government projects. Nearly 50 per cent of these are for supporting their endeavours, such as Long Term Irrigation Fund, Pradhan Mantri Krishi Sinchai Yojana, Swachh Bharat Mission, Gramin Aawas Yojana, etc. We are likely to borrow long-term bonds almost in the same range as last year.

What is the status of the venture capital fund, Nabventures, that you had launched a couple of months ago?

We have got an approval from the Securities and Exchange Board of India and of the initial capital of Rs 500 crore, closure of Rs 200 crore has already happened. Around 15-20 projects are in pipeline. Within one -two months, we will complete the first deal. We are targeting early to mid-stage entities.

Have you identified these start-ups?

Start-ups have approached us, and we are in the process of identifying them based on their innovation.

How are you monitoring the irrigation projects?

We have our own mechanism of field visit that we cover on the basis of outlay. We are now thinking of a digital platform of monitoring. The app will be available in the field and will allow uploads of observations. We have given the assignment to the Centre for Development of Advanced Computing. After the monitoring visit, the assessment will be on a real-time basis.

What should be the focus areas of the government?

The first is small and marginal farmers. We have 140 million farming households. Of these 120 million are small and marginal. PM-Kisan will boost their income. These farmers are also productive entrepreneurs. To enhance their productivity and participation, we should take them to the market area and market their produce. The focus, therefore, is now on farmer producer organisations (FPO). FPOs have been working through cooperative societies. Milk cooperative societies are a good example. Some of them have been successful. But new endeavour is being made through Companies Act.
 

How many FPOs are emerging as companies?

Most of the new FPOs are coming in through Companies Act as Section 8 companies. These are 60 per cent at the moment. One small study by us revealed that within one year because of increased size, you are able to negotiate better and get 2-3 percentage points more in price from middlemen. They can also buy in bulk, which gives them a saving of another 2-3 per cent. Mature FPOs are able to go into the areas of value addition. Once they start seeing market and feel they have potential to negotiate, further endeavour comes. Banana Growers Association, for instance, has a turnover of almost Rs 80 crore, making banana chips and exporting outside. Similarly FPOs for milk started storing milk through bulk cookers. There is value addition and continuity of initiative. In the last year’s Budget, there was an exemption of up to Rs 100 crore for FPOs.

What is the difference in the performance of FPOs as companies and cooperatives?

There is less cooperative inspectors’ interference. FPOs as companies have self-regulation, which results in better compliance. Transparent reporting is hallmark of the Companies Act. Nabard gives grant support of around Rs 21 lakh to FPOs for three-five years, handholding them like chief executive officer’s salary, establishing office, capacity building and mentoring them with CEO’s training. This is a good initiative and will get better returns.

The criticism of PM KISAN scheme has been related to difficulty in identification of the target farmers, besides the amount is too meagre. What is the response that you have got on the ground?

The farmers like the scheme. At least 30-35 days of wage payment is available to them. A small farmer is able to get at least get two bags of fertilisers and seeds immediately. So it is a support which needs to be appreciated.