Rajasthan is a state of abundance and opportunities. the Rajasthan Financial Corporation (RFC) is catalysing the MSMEs making the state a buzzing industrial center, writes Elets News Network (ENN).
Bordered by six major states in the northern, western and central parts of India the state of Rajasthan is a natural corridor between the wealthy northern and the prosperous western states, making it an important trade and commerce centre.
The mineral-rich state of Rajasthan has a diversified economy having agriculture, mining and tourism as its main engines of growth. The state mines produce gold, silver, sandstone, limestone, marble, rock phosphate, copper and lignite. Rajasthan accounts for 17.5 percent of the total cement grade limestone reserves in India and is the largest cement producer with 24 major cement plants having a total capacity of 55 million tonnes per annum.
It is the largest producer of oilseeds, seed spices and coarse cereals in India and holds out tremendous opportunities in the areas of organic and contract farming as well as in infrastructure developments related to agriculture.
The natural resources, policy incentives, strategic location and infrastructure in the state are favourably suited for investments in sectors such as cement, IT and ITeS, ceramics, minerals, manufacturing, tourism, automotive and agro-based industries. Rajasthan is the leading investment destination in India after Maharashtra and Gujarat because of peaceful environment, better law and order situation, excellent infrastructure, investment-friendly climate and very less population density.
Between 2011-12 and 2017-18, Gross State Domestic Product (GSDP) of Rajasthan expanded at a Compound Annual Growth Rate (CAGR) of 6.05% to $129.79 billion, whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 6.15% to $116.97 billion.
RFC: Industrial Catalyst for Rajasthan MSME Sector
The Rajasthan Financial Corporation (RFC), the leading PSU of Rajasthan catering to the financial requirements of tiny, small and medium scale industrial units in the State, is a statutory body created under the SFC Act in 1951.
RFC’s role in the changing skyline of the erstwhile desert state into a buzzing industrial center (with the State accounting for GDP of 30% in the industrial sector) has been humungous as the once largely barren land has emerged an equal contender in the post Independence industrialization.
Understanding the requirements of the entrepreneurs from establishing their dream industrial venture to expanding it over the period of time is the crux of RFC’s objective and it is keeping this in mind that the Corporation has conceptualized loan schemes over the years so as to customize them accordingly. Today it has a myriad of schemes for different financial needs of different category of entrepreneurs starting from their land, plant and machinery, raw material requirements to the need for expansion, renovation or upgradation.
There are schemes for establishing new ventures as well as for the existing running industrial units; as there are schemes for the raw material based or IT based ventures. Similarly, the schemes have been envisaged for the requirements of the women/SC/ST category entrepreneurs and at the same time for the young and budding youths aspiring to set up their own ventures.
Infusing New Synergy and Tapping New Sources
RFC’s latest additions in the network of schemes over the past couple of years include the Yuva Udhyamita Protsahan Yojana (YUPY), Guest House Scheme and Flexi-Scheme for Good Borrowers.
RFC has realised the need to contain the rising NPAs and initiated schemes for recovery of its bad debts
As per its nomenclature, YUPY, currently the most sought after loan scheme, has been framed specifically for the young graduates/Diploma/ITI holders up to the age of 45 years. For a maximum of 7 years period, financial assistance up to Rs.5.00 cr. at the most nominal interest rate of 7.5% only is extended by RFC for setting up projects in the industrial/ service/IT sector. A proposal is also being sent to the Government for vetting recent changes in the Scheme to make it more pragmatic and popular.
The existing running guest houses have also been recently made eligible under the Saral Scheme for availing fund requirements ranging from Rs 10 lakh to Rs.300 lakh for meeting out their capital requirements as well as for creating of additional fixed assets/renovation/ upgradation of its building, furniture & fixtures, plant & machinery.
The Flexi Scheme on the other hand has been specially customized for the good borrowers who have had their loan for the past at least four years with the Corporation with a consistently regular repayment track record. As the name suggests, the Schemes allows the borrower to avail disbursement of his sanctioned amount even in parts, a maximum of four times in a month as per one’s immediate requirement with interest being charged only to that extent. Another flexible feature built into this Scheme includes extension of the two years’ initial moratorium by another one year on the request of the borrower, subject to clean repayment pattern.
Leader Among Equals in Decreasing NPAs
While industries began to flourish in the 50s and 60s onwards with the active interventions and support of the various financial institutions, unfortunately, these institutions also began to be beleaguered with the non-performing assets (NPAs) which started accumulating at an alarming rate. The reasons were many, both internal and external – natural calamities, industrial sickness, willful defaulters, over enthusiasm among the entrepreneurs coupled with lack of demand predictability, etc. besides inexperience of the FIs in the wake of an independent India.
Fortunately, RFC had begun realising the need to contain the rising NPAs and initiated schemes for recovery of its bad debts. The Management renewed its emphasis on this crucial but so far lesser attended area of financing. While a separate NPA Section has been created to undertake the drive, all the officials and employees of the Corporation were allotted at least three NPA units to be followed up vigorously. The defaulters were traced out and followed up with the assistance of the local administrative machinery in as far flung states as West Bengal and Assam, besides the neighbouring states of Gujarat, Haryana and the NCR. As a result, recovery of until now considered most difficult bad debts became a reality when Rs.259.47 crore were successfully recovered under the NPA Scheme during 2017-18 – the highest among all SFCs.
Incidentally, in-built in the NPA Scheme is the incentive of 3% of the recovery amount offered to the local machinery in appreciation of its proactive support in accelerating the effort.