Management consulting firm Boston Consultancy Group (BCG) will soon start consultations with National Bank for Agriculture and Rural Development (Nabard) to prepare a roadmap for its restructuring.
This is important as Nabard is in the list of 25 public sector undertakings listed by the Centre for disinvestment.
A Nabard official who did not want to be quoted told Business Standard: BCG will receive the appoinment letter in a week. It will be involved in working out a strategy for restructuring Nabard to help it gear up for new challenges.”
“Nabard, which has already undergone a transition from being a development finance institution to a development facilitating and financing institution, needs to ramp up operations. This is because agricultural growth by the end of the 11th Plan is expected at 4 per cent and credit demand will increase due to this,” he added.
The plan envisages creation of a dedicated fund to support at least 35 per cent of Nabard’s operations by 2018, starting venture capital financing of value-chain projects, and making the refinance unit independent. The plan is to make Nabard Consualtancy an independent subsidiary and set up an independent microfinance and financial inclusion unit.
Nabard will continue to play a big role in refinance. However, its share is expected to come down to 7.5 per cent from 13 per cent. Thus, there is a need to use refinance to encourage banks to increase financing. In such a situation, Nabard may refinance only incremental group-level credit.
According to a Nabard official, BCG will also look into the option of floating a direct finance subsidiary to focus on area-based projects, value chains and venture capital financing.
BCG, which got the mandate for Rs 12 crore, beat Ernst & Young and Mckinsey for this assignment.