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NON- AGRICULTURAL

LOANS

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A Non Agricultural Loan is one which isgiven for other than Agricultural purposes.It is also known as Non Farm Sector

(NFS) Loan. NFS creates employment opportunities in

rural area hence it is important.

75% farmers are now in need ofsupplemental income sources to raisetheir living standards.

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PRINCIPLES OF SOUND LENDING

SAFETY OF LOAN ( Capacity &willingness)

REPAYMENT OF LOAN ( Liquidity &

payable on demand) PROFITABILITY (To earn income to pay

interest to depositors and Banks salary

of staff and other expenses. PURPOSE OF LOAN (It should be for

productive purpose).

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CLASSIFICATION OF NFS ACTIVITIES

Industries.

Services

Business

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LOAN MAY BE GIVEN TO

Individual borrower

Businessmen or to Industries

In Rural area Non-Farm Activities can bestarted by unemployed youth to generate

income for their livelihood and to utilize the

manpower and Material available in some

productive and constructive purpose for thedevelopment of individual as well as the

development of country.

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LOAN MAY BE GIVEN FOR TWO

PURPOSES:

1. INVESTMENT PURPOSE (BLOCK

CAPITAL): For Land, Construction of

Work Shed, Machinery, Tools etc.

2. WORKING CAPITAL : for purchase of

raw materials, payment of salary and

Wages to labour and recurring expenses.

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PERIOD OF LOAN ( under NFS)

1. Short Term period: up-to 1 year.

2. Medium Term period : More than 1 year

to 5 years; In special case up-to 7 years.

3. Long Term period : More than 7 years.

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TERMS & CONDITIONS NECESSARY

FOR SANCTION OF NFS LOAN

1. Purpose of loan

2. Amount of loan

3. Margin Money (Borrowers contribution)4. Period of Loan

5. Rate of Interest on loan

6. Penal Interest on loan (on default)

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7. Moratorium period/Gestation period

8. Repayment Schedule

9. EMI (Equal Monthly Installments of Principle &

Interest.

10. Insurance (to cover risk)

11. Advance cheques to ensure repayment of

Installments.12. Guarantors.

13. Documents/Security

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Activities under NFS loan

Industries

1. Processing units (Industrial & Consumer)

2. Dal & Oil Mills

3. Food Grain Processing unit4. Manufacturing Units

5. Spinning & ginning Mills(Cotton & Jute)

6. Jaggery (Gur) & Sugar Processing7. Assembling units

8. Agro-processing (Tomato souce, Veg. Soups)

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Service Sector

1. Vehicle repair

2. Fridge/cooler Repair

3. Hair dresser

4. Beauty parlor5. Plumber

6. STD Booth/PCO

7. Fax-Photocopier

8. Shoe Repair9. Tailoring

10.Floor Mill

11. Electronic repairs

Professionals:

1. Advocates

2. Charted Accountants

3. Architect4. Agro-clinics

5. Doctors & Medicalpractitioners

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12. Grinding

13. Cutting, polishing units,

14. Assembling Units, packaing, testing,

15. Toys making

16. Handicrafts and handlooms (weavers)

17. Hand made paper & its products(envolop, Files, small boxes etc.)

18. Furniture making

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Business

1. Restaurant

2. Hotel

3. Traders

4. Agents5. Dealers

6. Stockiest

7. Shopkeepers

8. Readymade garments9. Tea shop

10. Shoe-maker

11. Cash credit to business men

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12.Internet Cafess

13. Electonic appliances

14. Television & Radio shop 15. Cloth merchants

16. General Stores

17. Stationery shop & Book-selling 18. Various Agency business.

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Unit cost of Non-Agricultural activities

for Rural AreaS .No. Activity Amount

(Rs. In lacs)

1. Readymade Garments 0.50

2. Embroidery 0.30

3. Dari 0.304. Canvass work 0.30

5. Mattress 0.35

6. Ice-cream lorry 0.40

7. Pan shop 0.20

8. Fruits & vegetable shop 0.25

9. Bakery 0.25

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S .No. Activity Amount

(Rs. In lacs)

10. Dairy booth 0.3411. Dhaba 0.33

12. Sweet shop 0.35

13. Tea, cold drink etc 0.35

14. Floor mill 0.35

15. General store (Rural) 0.32

16. Blacksmith (Rural) 0.50

17. Carpenter (Rural) 0.5018. Barber shop 0.25

19. Auto rickshaw 0.80

20. Bi-cycle repair 0.25

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S .No. Activity Amount

(Rs. In lacs)

21. Compressor, Tyre tube 0.30

22. Auto mechanic 0.4123. Refrigerator, cooler, T.V., Radio repair 0.35

24. Watch repair 0.30

25. Battery charging 0.30

26. Motor winding 0.2527. Electric shop 0.30

28. Rural tent house, amplifier 0.40

29. Rural band 0.30

30. Beauty parlor 0.4031. Stationary shop 0.30

32. Typing shop-Computer Training 0.30

33. Photo shop 0.30

34 Laundry 0.25