Government sets up panel on SARFAESI, credit mobilisation

DIMAPUR: State government has constituted a state level committee on SARFAESI and credit mobilisation to examine the legal framework for enforcing security interests in the state and strengthen credit flow to productive sectors.
According to a DIPR report, the committee was constituted by the governor following a decision of the State Level Bankers’ Committee (SLBC) at its meeting for the quarter ended March 2026 and in follow-up to the North East Bankers’ Conclave (NEBC) 2.0.
The committee, chaired by the finance commissioner, would include representatives of the Law & Justice Department, Investment & Development Authority of Nagaland (IDAN), SLBC and nine banks. Representatives of NABARD, SIDBI and RBI, Kohima, will be special invitees.
A key mandate would be to examine the creation and enforcement of security interests in Nagaland under the SARFAESI Act, 2002, 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.
The committee would assess an Article 371(A)-compatible statutory security instrument and alternatives involving guarantee cover and cash-flow appraisal, and recommend the option or combination considered suitable for the state.
In consultation with the Law & Justice Department, the panel would determine whether the proposed framework requires a resolution of the Assembly, a state notification or an SLBC operating protocol, and prepare the necessary draft. It would also seek banks’ concurrence on accepting the recommended documentation as valid security and credit-enablement documentation.
On credit mobilisation, the committee would work on mechanisms for loan facilitation, including sponsorship, application readiness, guarantee tie-ups and last-mile follow-up under flagship credit-linked schemes, using the Chief Minister’s Micro Finance Initiative as a working model.
The committee would also recommend a State Credit Guarantee (First-Loss Default Guarantee) Fund, including its corpus, coverage, trigger and exit terms, for consideration by the Cabinet after fiscal responsibility and contingent-liability assessments.
It would further examine a proposal to set a productive-credit sub-target of at least 50% of incremental credit as an SLBC performance metric, aimed at ensuring that improvements in the credit-deposit ratio are not driven solely by salary-backed personal lending.
The panel would also examine linking government banking business to bank performance within the RBI agency-bank framework and place the proposed mechanism before the SLBC.
The committee may co-opt members, invite special invitees and constitute sub-groups on legal and credit mobilisation issues. 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 sanction.