NON- AGRICULTURAL LOANS

A Non Agricultural Loan is one which is given 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 of supplemental income sources to raise their living standards.

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).

CLASSIFICATION OF NFS ACTIVITIES

Industries. Services Business

LOAN MAY BE GIVEN TO

Individual borrower Businessmen or to Industries
In Rural area Non-Farm Activities can be started by unemployed youth to generate income for their livelihood and to utilize the manpower and Material available in some productive and constructive purpose for the development of individual as well as the development of country.

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.

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.

TERMS & CONDITIONS NECESSARY FOR SANCTION OF NFS LOAN

1. 2. 3. 4. 5. 6. Purpose of loan Amount of loan Margin Money (Borrowers contribution) Period of Loan Rate of Interest on loan Penal Interest on loan ( & on default)

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

Activities under NFS loan

Industries 1. Processing units (Industrial & Consumer) 2. Dal & Oil Mills 3. Food Grain Processing unit 4. Manufacturing Units 5. Spinning & ginning Mills(Cotton & Jute) 6. Jaggery (Gur) & Sugar Processing 7. Assembling units 8. Agro-processing (Tomato souce, Veg. Soups)

Service Sector
1. Vehicle repair 2. Fridge/cooler Repair 3. Hair dresser 4. Beauty parlor 5. Plumber 6. STD Booth/PCO 7. Fax-Photocopier 8. Shoe Repair 9. Tailoring 10.Floor Mill 11. Electronic repairs

Professionals: 1. Advocates 2. Charted Accountants 3. Architect 4. Agro-clinics 5. Doctors & Medical practitioners

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

Business
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Restaurant Hotel Traders Agents Dealers Stockiest Shopkeepers Readymade garments Tea shop Shoe-maker Cash credit to business men

12.Internet Cafe 13. Electronic appliances 14. Television & Radio shop 15. Cloth merchants 16. General Stores 17. Stationery shop & Book-selling 18. Various Agency business.

Unit cost of Non-Agricultural activities for Rural Area

S .No. Activity Amount (Rs. In lacs)

1. 2. 3. 4. 5. 6. 7. 8. 9.

Readymade Garments Embroidery Dari Canvass work Mattress Ice-cream lorry Pan shop Fruits & vegetable shop Bakery

0.50 0.30 0.30 0.30 0.35 0.40 0.20 0.25 0.25

S .No.
10. 11. 12. 13. 14. 15. 16. 17.

Activity
Dairy booth Dhaba Sweet shop Tea, cold drink etc Floor mill General store (Rural) Blacksmith (Rural) Carpenter (Rural)

18. 19. 20.

Barber shop Auto rickshaw Bi-cycle repair

Amount (Rs. In lacs) 0.34 0.33 0.35 0.35 0.35 0.32 0.50 0.50 0.25 0.80 0.25

S .No. 21. 22. 23. 24. 25. 26.

Activity Compressor, Tyre tube Auto mechanic

Refrigerator, cooler, T.V., Radio repair Watch repair

Amount (Rs. In lacs) 0.30 0.41 0.35 0.30 0.30 0.25

Battery charging Motor winding

27.
28. 29. 30.

Electric shop
Rural tent house, amplifier Rural band Beauty parlor

0.30
0.40 0.30 0.40

31.
32. 33. 34

Stationary shop
Typing shop-Computer Training Photo shop Laundry

0.30
0.30 0.30 0.25