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. 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)
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. Restaurant
2. Hotel
3. Traders
4. Agents
5. Dealers
6. Stockiest
7. Shopkeepers
8. Readymade garments
9. Tea shop
10. Shoe-maker
11. Cash credit to business men
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.
Unit cost of Non-Agricultural activities
for Rural Area
S .No. Activity Amount
(Rs. In lacs)
1. Readymade Garments 0.50
2. Embroidery 0.30
3. Dari 0.30
4. 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
S .No. Activity Amount
(Rs. In lacs)
10. Dairy booth 0.34
11. 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) 0.50
18. Barber shop 0.25
19. Auto rickshaw 0.80
20. Bi-cycle repair 0.25
S .No. Activity Amount
(Rs. In lacs)
21. Compressor, Tyre tube 0.30
22. Auto mechanic 0.41
23.
Refrigerator, cooler, T.V., Radio repair
0.35
24.
Watch repair
0.30
25. Battery charging 0.30
26. Motor winding 0.25
27. Electric shop 0.30
28. Rural tent house, amplifier 0.40
29. Rural band 0.30
30. Beauty parlor 0.40
31. Stationary shop 0.30
32. Typing shop-Computer Training 0.30
33. Photo shop 0.30
34 Laundry 0.25