Yours truly's following scheme has been recommended to the planning commission by the working group on increasing credit flow to SME sector.
Kindly send in your feedback to improve the scheme. Manoj Email - [EMAIL PROTECTED] <mailto:[EMAIL PROTECTED]> message from the moderator: contributors please email your feedback directly to Manoj Das, and Manoj Das you may please summarize the feedback at a later date Scheme for Barefoot Consultants (B-cons) The Credit flow scenario and need for the scheme: The credit flow to the Micro and Small sector is very low in the country, which is about 14.26% to the organized sector in the country and about 3.09% to the unorganized sector. 99.5% of units in the country are Micro enterprises and 87% of the units in SME sector in the country are in the unorganized sector. The situation is much worse in the North Eastern region of the country and has raised concerns among the policy makers. To attain the targeted rate of growth of 9% by 11th plan, the increased credit flow is a must. One main reason for low credit flow to the SME sector in the country is the lack of knowledge and confidence among the small borrowers about the banking facilities available. In most cases the banking and funding facilities are in urban settings and the rural person lacks the confidence and means to contact the lenders. The process is also costly and time consuming. In case of commercial banks the branch managers have no time to devote for industrial or enterprise loans. Keeping this need in mind a concept of "Barefoot Consultants (B-con)" have been devised by NEDFi. B-cons will be an intermediary between the prospective borrower and the financial institutions and banks. Target candidate: The target B-con candidate will be ideally an educated unemployed person to serve about 10 villages in plain areas and 3 villages in Hilly regions. For urban areas a different yardstick can be adopted. Just for ease of arriving at a figure we have taken help of population figures here. For plain areas for every 9000 population one B-con and for hills for every 3000 population one B-con is proposed. A science stream or commerce stream person will get preference due to their coziness with numbers and also understanding of process flow parameters in business like situations. Sr. No. State Population (thousands) No. of B-cons proposed 1 Arunachal Pradesh 1091 363 2 Assam 26638 2959 3 Manipur 2388 796 4 Meghalaya 2306 768 5 Mizoram 891 297 6 Nagaland 1988 662 7 Sikkim 540 180 8 Tripura 3191 353 Total 6741 The contents of training: The scheme will be to train the selected B-cons at district headquarters with the help of DICs and Banks. The programme will be for 5 days, and the contents will as under:- 1. Basics of micro and small enterprises 2. Basic knowledge about identification of schemes 3. Basic principles of preparation of schemes 4. Training on Filling up of forms, documentation, mortgaging process, credit guarantee, simple legal procedures and documentation etc. 5. Tips on dealing and handholding small entrepreneurs. After completion of the training he/she will be put under a mentor bank at the neighbouring area. Role of the B-cons: The role of the B-cons will be to act as the bridge between the borrower and the financial institutions and banks. They will minimize the travel required by the entrepreneur. In fact a basket of fee can be devised for each activities he performs. The B-cons can also be paid by the banks or FIs a percentage (say 5% of the interest earned) of the interests the FIs and Banks are going to earn in future on prorata basis. This scheme can be developed as a simile to LICs agents scheme. That way the B-con will be motivated to act as a recovery agent as his own interest will also lie in the repayment. Cost of the scheme: The average training cost is a rural setup will not be more than Rs. 5000/- (Rupees Ten Thousand only) per head, thus total coming to Rs. 33705000/- (Rupees Three Crores Seventy Lakhs Five Thousand only) or say Rs. 3.50 crores considering high cost of training in hilly areas. The trainees will not be paid any stipend, but the actual cost of training will be borne by the agency. Implementing Agency: NEDFi will be the nodal agency for implementing the scheme. It will set up a mission office with former officers from banks and FIs to train the B-cons in a years' time. Proposed Means of Finance: (figures in Rs. lakhs) NEDFi 50.00 SIDBI 100.00 NEC 50.00 Ministry of SSI & ARI 50.00 DONER 50.00 State Bank of India 50.00
