Nagaland constitutes State-level panel on SARFAESI, credit mobilisation

Dimapur, October 1 (MExN): The Nagaland Government has constituted a State Level Committee on SARFAESI and Credit Mobilisation to examine issues relating to the creation and enforcement of security interest in the State and measures to improve access to productive credit.

According to a DIPR report, the committee was constituted pursuant to a decision taken at the State Level Bankers’ Committee (SLBC) meeting for the quarter ended March 2026, held on July 3, and as a follow-up to the North East Bankers’ Conclave (NEBC) 2.0.

The committee will be chaired by the Finance Commissioner, Government of Nagaland, with representatives from the Law & Justice Department, Investment & Development Authority of Nagaland (IDAN) and SLBC as members.

Representatives from SBI, Bank of Baroda, Nagaland Rural Bank, Nagaland State Cooperative Bank, UCO Bank, Canara Bank, Axis Bank, HDFC Bank and ICICI Bank will also be members. The Under Secretary, General Branch, Finance Department, will serve as Member Secretary, while representatives from NABARD, SIDBI and RBI, Kohima, will be special invitees.

The committee has been tasked with examining the legal position concerning the creation and enforcement of security interest in Nagaland under the SARFAESI Act, 2002, in light of Article 371(A) of the Constitution and the Supreme Court judgment in North Eastern Development Finance Corporation Ltd. v. M/s L. Doulo Builders and Suppliers Co. Pvt. Ltd.

It will evaluate an Article 371(A)-compatible statutory security instrument as well as collateral substitution through guarantee cover and cash-flow appraisal, and recommend an instrument or combination considered suitable for Nagaland.

In consultation with the Law & Justice Department, the committee will determine whether the recommended mechanism requires a Legislative Assembly resolution, State notification or an SLBC operating protocol, and prepare the corresponding draft.

It will also seek concurrence from SLBC member banks on accepting the recommended documentation as valid security and credit-enablement documentation across the banking system in the State.

On credit mobilisation, the committee will work towards activating State machinery for loan facilitation, including sponsorship, application readiness, guarantee tie-ups and last-mile follow-through under flagship credit-linked schemes. The Chief Minister’s Micro Finance Initiative (CMMFI) will serve as a working template.

The panel will recommend the design of a State Credit Guarantee or First-Loss Default Guarantee Fund, including its corpus, coverage, trigger and exit terms. The proposal will be placed before the Cabinet after testing for compliance with the Fiscal Responsibility and Budget Management (FRBM) framework and contingent liabilities.

The committee will also recommend a productive-credit sub-target of at least 50% of incremental credit as a formal SLBC performance metric. 

The stated objective is to ensure that improvements in the Credit-Deposit (CD) ratio are not driven by salary-backed personal lending alone.

It will further examine linking government banking business with bank performance within the RBI agency-bank framework and place the proposed modality before the SLBC.

The committee may co-opt members, invite special invitees and constitute sub-groups on legal and credit mobilisation matters. It has been directed to submit its report to the State Government within 90 days and seek approval from the competent authorities on matters requiring such approval.