Lending, But Not Banks

As banks are in the race of deposits and advances, there are two government institutions scripting new successes with negligible default, reports Riyaz Ul Khaliq

Dr MI Parray
Dr MI Parray

Apart from the conventional financial institutions in the state, a couple of other institutions are also dispensing credit to certain specific sectors. Jammu and Kashmir Entrepreneurship Development Institute (JKEDI) is one such institution which provides funding to start ups through bank linked credit schemes and through direct lending.

The Seed Capital Fund Scheme (SCFS) of the state government, implemented by the institute, has as inbuilt mechanism of not only providing linkage to bank credits to startups but also to provide the first generation entrepreneurs with free seed money. The institute is also the State Channelizing Agency of National Minority Development and Financial Corporation (a ministry of Minority Affairs Corporation) wherefrom it barrows money and lends it to small unit holders at concessional rates of interest. It also provides hassle free credit to young entrepreneurs through a state sponsored Youth Startup Loan Scheme. Through these schemes, the institute has been over the last four years, been able to fund and finance more than six thousand small units in almost all districts of the state.

Established in March 1997, JKEDI started its regular activities from February 2004. Present in every district of J&K, EDI is enabling entrepreneurship and promoting development at the grassroots. With J&K Bank as its debt syndicator, EDI is sole implementing agency of Seed Capital Fund Scheme (SCFC).  Major component of Sher-e-Kashmir Employment Welfare Programme for Youth (SKEWPY), SCFC provides seed money up to Rs 7.50 lakhs coupled with bank finance at concessional rates to eligible youth for setting up their enterprises. In the steering committee meeting of SCFC held on July 30, 2015, Rs 163.10 lakh were sanctioned to 51 beneficiaries.

Nahida Soz
Nahida Soz

Another organization which provides low-cost credit only to woman entrepreneurs is the J&K State Women Development Corporation. This institution also borrows money from National Minority Development and Finance for onward lending to woman artisans and small time entrepreneurs.

“We have advanced Rs 110 crore over the years and we work with the weakest sections of the society – all women,” Ms Naheed Soz, the head of the J&K Women Development Corporation said. “Believe me; we have default of less than half a crore as we have encountered women actually being punctual in repaying their loans in time.”

The corporation works across the state in all the 22 districts and has evolved a mechanism to assess, train, lend and recover. “IT took a bit of time in evolving the process but it is working flawlessly,” Soz adds.

These twin institutions are the new models in managing credit in such a way that there is no default and the corpus helps lit new lights of hope. May be in coming days they may become J&K’s pioneers in non-banking finance, formally.


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