The Nagaland Governor has constituted a State Level Committee on SARFAESI and Credit Mobilisation to examine issues relating to security interest under the SARFAESI Act, 2002, in the context of Article 371(A) of the Constitution, and to strengthen credit mobilisation in the State.
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 in follow-up to the North East Bankers’ Conclave (NEBC) 2.0.
The Finance Commissioner, Government of Nagaland, will chair the committee. Members will include representatives from the Law & Justice Department, Investment & Development Authority of Nagaland (IDAN), SLBC, SBI, Bank of Baroda, Nagaland Rural Bank, Nagaland State Cooperative Bank, UCO Bank, Canara Bank, Axis Bank, HDFC Bank and ICICI Bank. The Under Secretary, General Branch, Finance Department, will be the Member Secretary, while representatives from NABARD, SIDBI and RBI, Kohima, will be special invitees.
On security interest, the committee will examine the legal position concerning the creation and enforcement of security interest in Nagaland under the SARFAESI Act, particularly in light of Article 371(A) and the Supreme Court judgment in North Eastern Development Finance Corporation Ltd. v. M/s L. Doulo Builders and Suppliers Co. Pvt. Ltd., 2025 INSC 1446.
It will evaluate an Article 371(A)-compatible statutory security instrument and collateral substitution through guarantee cover and cash-flow appraisal, and recommend the instrument or combination considered suitable for Nagaland. In consultation with the Law & Justice Department, it will determine whether the recommended instrument requires a Legislative Assembly resolution, State notification or SLBC operating protocol and prepare the corresponding draft.
The committee 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 activate State machinery for loan facilitation, including sponsorship, application readiness, guarantee tie-up and last-mile follow-through under flagship credit-linked schemes, using the Chief Minister’s Micro Finance Initiative (CMMFI) as a working template.
It will recommend the design of a State Credit Guarantee (First-Loss Default Guarantee) Fund, covering its corpus, coverage, trigger and exit terms, for consideration by the Cabinet after FRBM and contingent-liability testing.
The committee will also recommend a productive-credit sub-target of at least 50 percent of incremental credit as a formal SLBC performance metric, with the stated objective of ensuring that the Credit-Deposit (CD) ratio is not achieved through salary-backed personal lending alone.
It will further examine linking Government banking business to bank performance within the RBI agency-bank framework and place the proposed modality before the SLBC.
The committee may examine other matters incidental to sound decision-making on its terms of reference and may co-opt members, invite special invitees and constitute sub-groups on legal and credit mobilisation matters.
The committee is required to submit its report to the State Government within 90 days and seek approval from the competent authorities on matters requiring such approval.
