The constitution of the State Level Committee on SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) and Credit Mobilisation comes at an important juncture for Nagaland’s economy. For too long, Nagaland has faced a simple problem with institutional credit. Banks collect deposits in the State, but not enough of that money goes into productive activities that meet the needs of the local economy.
The committee’s mandate brings Article 371(A) into the conversation in a particularly important way. Any attempt to expand credit in Nagaland must recognise the constitutional protection surrounding the ownership and transfer of land. At the same time, the difficulty of using land as conventional collateral cannot be allowed to become a permanent barrier between banks and legitimate borrowers.
This is where the search for an Article 371(A)-compatible security instrument, along with alternatives such as guarantee cover and cash-flow appraisal, assumes importance. Nagaland needs a system that can give banks reasonable security while giving entrepreneurs and businesses a realistic route to institutional finance.
The proposed State Credit Guarantee Fund could widen that avenue. But its success will depend on whether it encourages responsible lending rather than simply transferring banking risks to the public exchequer. The proposal for at least 50 percent of incremental credit to be directed towards productive purposes is equally significant. The goal should be clear. Credit must help create businesses, support livelihoods and strengthen the local economy.
The Government’s proposal to facilitate borrowers from application to disbursement also deserves to be taken seriously. A scheme on paper is of little value to someone who cannot get through the process of obtaining a loan.
The committee has been given 90 days. That is a short window, but it is enough time to establish the direction. Its real test will be whether it can reconcile Article 371(A), legitimate banking security and the credit needs of a modern economy. Nagaland does not merely need more credit. It needs a credit system capable of financing enterprise without asking the Constitution to pay the price. It needs credit that creates businesses, jobs, investment and enduring economic capacity. This committee has the opportunity to help build that foundation, provided its recommendations move from paper to practice.
