THIRUVANANTHAPURAM: The State Government will explore the possibility of reviving a proposal to float a special purpose vehicle (SPV) for promoting the Kudumbasree Neighbourhood Groups (NHGs) in the State, according to Finance Minister T.M. Thomas Isaac.

The proposal, which would have gone a long way in supporting the NHGs in the micro-finance sector, had almost evolved towards the end of the last United Democratic Front (UDF) Government on the initiative of the then Executive Director of the Kudumbasree Mission T.K. Jose. But it has remained frozen for a year following a change of regime in the State.

``I think it was only the general inertia that led to the freezing of the proposal. Anyway, I will look into it immediately and explore the possibility of reviving it in a more meaningful way,'' Dr Isaac told The Hindu on Wednesday.

The proposal was to register a company with charitable objectives under Section 25 of the Companies Act. The total equity base of the company was proposed at Rs.20 crore, with the Government and its allied institutions holding 51 per cent of the stake. The Small Industries Development Bank of India (SIDBI) had promised to contribute Rs.2.5 crore as equity participation in the company. Canara Bank and State Bank of India had offered to take shares in the company.

Several Government agencies such as the Rashtriya Mahila Kosh, National Backward Class Finance and Development Corporation and the National Minority Communities Development and Finance Corporation had hinted at the possibility of lending funds to the proposed company at a very low interest rate of about 1 to 4 per cent, so that the NHGs can use the money for onward lending.

The objectives of the company were to support the NHGs in micro-financing, enterprise development and technology accessing as well as to help them to branch out to areas such as housing and insurance, which are not traditionally treated as part of the micro-finance activities.

Apart from onward lending, the company would have helped the NHGs in capacity building in areas such as management and accounts keeping in the micro-finance sector and micro-enterprises.

But one of the major areas of support that the new company was supposed to render was in the evolution of a common brand and common marketing strategy for Kudumbasree products. There were also proposals for pooling up the activities of NHGs in areas such as raw material and technology sourcing.

If worked out, these proposals would have made the operations of the NHGs more cost-effective. They would have augmented their marketing potentials not only within the country but even abroad. In fact, there was an offer from a consortium linked to the European Union to provide training for the Kudumbasree units to sell their products in E.U. countries under the Fair Trade regime, which is much less discriminatory than the World Trade Organisation (WTO) norms.

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