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National Bank for Agriculture and Rural Development
 Types of Refinance  Facilities  
 Interest Rates  
 Direct Credit  
 Production Credit  
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 Rural Infrastructure  
 Farm Sector Schemes  
 Rural Non Farm Sector  
 Rural Housing  

Credit functions


Non-Farm Sector Schemes


Rural Non Farm Sector (RNFS) holds the key to faster economic development of the country. It has potential and promise for generating employment and increased income in the rural areas. Hence, NABARD has identified financing, development and promotion of RNFS as one of its thrust areas.

NABARD has evolved several refinance and promotional schemes over the years and has been making constant efforts to liberalise, broad base and refine/ rationalise the schemes in response to the field level needs. The focus has been on greater credit flow and provision of linkages for small, cottage and village industries, handicrafts and other rural crafts and service sector in the decentralised sector in the rural areas.


Refinance Schemes

Loan Scheme (ELS)

The refinance schemes which are in force viz. Integrated Loan Scheme (ILS) and Composite Loan Scheme (CLS) have been merged and modified into a new scheme ie. Enterprise Loan Scheme (ELS).

Salient features

Institutions eligible for drawal of refinance. Commercial Ba

nks, Regional Rural Banks, State Co-operative Banks, State Co-operative Agriculture and Rural Development Banks and Scheduled Primary Urban Cooperative Banks.


Individuals, artisans, small entrepreneurs, groups of individuals, associations (formal and informal), proprietary/partnership firms, co-operative societies, registered institutions/ trusts, NGOs/voluntary agencies, private and public limited companies, etc financed by the above eligible institutions.


To set up new units as well as for modernisation/ renovation/ expansion/diversification of existing units and also for replacement of old and obsolete machinery even if the units were not initially financed by the banks and refinanced by NABARD.

To change over to new process of manufacturing/introduction of new technology/ computerisation, etc.  For Expansion/Diversification, any unit which is in existence for at least two years will be eligible.

Ÿ For acquisition of new machinery and equipments resulting in additional production capacity and/or improving productivity or introducing new product/product line, etc.  (The total cost of investment in Plant and Machinery including that of modernisation/ renovation/expansion/diversification of the existing units to be financed should not exceed the SSI limit prescribed by the Govt. of India).

Eligible activities

All manufacturing, processing, marketing and approved service activities in the SSI sector with emphasis on Cottage, Village, Tiny Industries, Rural Artisans and Rural Crafts. All activities in rural areas or benefiting rural areas that are income generating and/or employment generating, including all service sector activities, are eligible activities under NFS for refinance assistance.

For example :
Educational Services (Educational institutions such as schools, colleges set up privately and Educational loans to students).  Health services (Hospitals/ Clinics, Health Care Units (both human & animals) set up in rural areas, mobile hospital vans with necessary equipment, para health services, etc).  Construction sector (Building Material Supply Bank, Shops/ marketing outlets for rural products). Tourism sector ( Theatres, Eco-Tourism, Fair/Exhibition Complex, Hotels, Motels, etc). Vehicles (Two wheeler/ three wheelers and four wheelers other than those covered under SRWTO scheme).  Information Technology ( All activities providing information technology to the rural people). Infrastructure (Rural Industrial Estates, Growth Centres, Communication Networks, Rural Safe Drinking Water,etc).

Project Components

For block and/or working capital requirements of tiny/SSI/Service sector units.
In respect of cottage and village industries, artisans, etc, a component for consumption credit could be built in the Working Capital component keeping in view the value of the family labour engaged in the productive activity. If a unit avails Working Capital alone, the ceiling for refinance limit per unit shall be limited to Rs 10 lakh.

Block capital will include the following:

Cost of land (to the extent of borrowers' down payment), workshed, plant and machinery, equipment and tools, computers, technology upgradation, project formulation and consultancy charges, preliminary and pre-operative expenses, etc. and working capital for one operating cycle.

While sanctioning loans, banks may carefully work out the credit requirements of the borrowers both for term loan and working capital. The quantum of working capital component may be assessed taking into account the incremental requirement also for a reasonable period within which the unit is expected to stabilise. Also, wherever the loan includes both term loan and working capital components, while drawing up the repayment schedule, it may please be ensured that, as far as possible, the working capital component of the loan is recovered after the block capital component is repaid, so that the unit will have adequate funds for meeting the working capital requirements.

Repayment period of loan

The repayment period should be fixed between 2 years and 10 years with a need based moratorium of upto 18 months for individual cases, based on the debt servicing capacity of the borrower and taking into account the nature of activity to be financed, operating cycle, cash flow and the borrower’s sustenance needs.


Small Road and Water Transport Operators Scheme (SRWTO)

Terms and Conditions


Individuals, groups of individuals including partnership/ proprietary firms and co-operative enterprises would be eligible for assistance under the scheme. The borrowers should be from the "rural areas" and should utilise the vehicle mainly for transportation of rural farm and non-farm products and inputs and passengers to/ from marketing centres.


  • The vehicle should be duly registered with Regional Transport Authority (RTA) as "public transport" vehicle.
  • The number of vehicles to be financed shall be subject to the ceiling on such number as stipulated by RBI for financing under priority sector lending (at present 10 vehicles).
  • Water transport units such as boats, launches, etc., have been brought within the ambit of SRWTO scheme.
  • Financing small refrigerated vans, bulk carriers for edible oil, petroleum, etc., would also be eligible for refinance.
  • Loans for purchase of second-hand vehicles are also eligible for refinance under the scheme provided the financing bank is satisfied with the valuation of the vehicle, documentation, economic life of the vehicle, etc. The repayment period may be fixed taking into account the economic life of the vehicle financed and repayment capacity of the borrower.
  • The loan component may include the cost of chassis, body building expenses, initial taxes, insurance, etc. The loan disbursement under the scheme should be made directly to the supplier and/ or concerned agencies.
  • Two wheelers are not eligible for refinance under this scheme and can be covered under service sector activities.
  • There is no stipulation on the Gross Vehicle Weight (GVW) tonnage of the vehicle proposed to be purchased.
  • Financial assistance for purchase of additional vehicles will also be eligible provided the same falls under Priority Sector Lending.
  • Vehicles registered as 'private carriers' will not be covered under the scheme.

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Security and Insurance

The vehicle should be registered as 'public goods/ passenger carrier' with the Regional Transport Authority (RTA). The loan will be advanced against the hypothecation of the vehicle in favour of the financing institution. The hypothecation clause/ bank's lien should be noted with the RTA.

The vehicle should be comprehensively insured for the full value covering all risks. The insurance policy may be either in the joint names of the borrower and the bank or assigned in favour of the latter. The vehicle should be adequately insured at all times without any break.

The vehicle should be inspected periodically by the financing bank.


Generally, the loan is repayable within 5 years with a moratorium period of 6 months.


Soft Loan Assistance Scheme for Margin Money


The objective of the scheme is to provide financial assistance to the prospective entrepreneurs who have the requisite talents and traits of entrepreneurship, but lack necessary monetary resources of their own for setting up units/implementing projects under NABARD refinance schemes for non-farm sector, SEMFEX II borrowers and innovative, high tech projects, export oriented units, agro-processing schemes, and agriculture graduates for setting up of Agriclinics and Agribusiness Centres covered under the farm sector.


The loan assistance towards margin money will be available to the entrepreneurs/promoters comprising individuals, proprietary/partnership concerns, groups of individuals, industrial co-operative societies, government/quasi-government agencies, promotional agencies, development corporations, registered and charitable institutions and voluntary organisations.
Soft Loan Assistance for Margin Money will not be available for SRWTO schemes (with the exception to SEMFEX II borrowers) and Rural Housing.

Mode of Assistance

Margin Money assistance will be by way of soft loans to the entrepreneur/ promoter.

Scope of assistance

Margin money assistance shall be available to the deserving entrepreneurs of all categories covered under this scheme under ARF whether or not the financing bank avails refinance from NABARD, subject to the conditions stipulated in the following paragraphs.

Quantum of Assistance

The quantum of assistance will be determined, among other things, on the basis of the gap between the normal level of borrower's contribution (margin) prescribed by RBI and the borrower's own minimum contribution (stake) for the project to be stipulated by the bank and also the other subsidies/incentives/assistance, if any, provided by the Central/State Government(s).

The margin requirement will be in conformity with the RBI norms under priority sector and the bank may insist that the entrepreneur brings in the stipulated percentage thereof as his own contribution. The amount of assistance shall be equal to 100% of the shortfall in enterpreneur's/ promoter's contribution i.e. the difference between the margin requirement as per RBI norms and the actual contribution made by the entrepreneur upto 20% of the project cost, subject to a maximum of Rs.5 lakh.

NB: As an exception, under SRWTO scheme, margin money assistance may be extended to SEMFEX II borrowers on a very selective basis, restricting to 10% of the cost of the vehicle.

The relaxation of delinking of Margin Money assistance from availment of refinance is applicable only under ARF. Higher amount of Margin Money Assistance in excess of Rs 5 lakh per unit, subject to margin money norms as prescribed by RBI could be considered selectively by NABARD, Head Office on a case to case basis, where the project is either 100 % export oriented, innovative, high-tech or agro-processing and benefitting a large number of small producers. The assistance will, however, be available under pre-sanction procedure i.e., only when the financing bank avails refinance from NABARD against the term loan.


Terms & Conditions

Extent of refinance :
Refinance assistance to the financing banks will be provided to the extent of 100% of the margin money loan .

Rate of interest :
The refinance assistance provided against the loan for margin money will be, for the present, free of interest. However, the financing bank will be allowed to levy a service charge upto a maximum of 5% p.a (except for Agri-Clinic/Agri-Business where it is 2% p.a) simple rate at the discretion of the bank, on the outstanding amount of margin money loan. In the case of borrowers of SEMFEX-II, the banks may waive the service charge at their discretion.

Repayment period :
Margin Money loan will be recovered along with the term loan in suitable instalments.

Drawal of Refinance

a) In case the financing bank avails refinance on the relative term loan sanctioned to the entrepreneur, the banks may sanction and release the soft loan assistance and claim refinance from NABARD, furnishing separate drawal applications for refinance for term loan and margin money assistance.

b) Banks may also draw refinance towards margin money assistance without availing refinance against the term loan. In such cases, they may use the same format and approach NABARD, Regional Office after sanction of the assistance at their end.

c) In case of proposals covered under pre-sanction procedure, banks may submit proposals for both refinance for term loan and soft loan assistance simultaneously to NABARD Regional Offices. Refinance may be drawn in the usual manner, once the proposal is sanctioned by NABARD.

Role of Banks operating the scheme

The banks through which the margin money assistance is extended to the borrowers are expected, among other things, to make a thorough evaluation of the entrepreneur with a view to assessing his/her capability to set up and run the project successfully. The banks may also continuously monitor the progress of the unit at various stages.

 Schemes under pre - sanction procedure


(i) Term Loan to SSI units (through CBs & Scheduled PCBs)



Individuals, Proprietary / Partnership concerns, Private/ Public Limited Companies, Promotional/ Developmental Organisations, State Level Federations/ Corporations, Joint Sector Undertakings.



Setting up of new units and modernisation/ renovation/ expansion/ diversification of existing units (other than agro-industries).


Eligible items for investment

  • Land and Site Development (including cost of land upto margin money required to be brought in by the borrower).
  • Construction of workshed (including civil structure, godowns for storage, market outlets and other essential amenities).
  • Plant & Machinery. (including machinery/ equipment required for packaging and preservation)
  • Equipment and tools.
  • Delivery van.
  • Project formulation and consultancy charges.
  • Preliminary and pre-operative expenses.
  • Margin for working capital.

Repayment period

3 to 10 years with moratorium of 12 months.
Debt Equity Ratio (DER) - 3 : 1


(ii) Term Loan to Industrial Co-operatives (through SCBs)



Industrial Co-operative Societies identified as viable/ potentially viable by the State Government.


Eligible items of investment

a) Acquisition of equipment and tools.
b)Construction of workshed.
e)Purchase of delivery van

(iii) Project Finance for Agro-Industries (through CBs, Scheduled PCBs & SCBs)



a) State level corporations such as agro-industries corporations, forest/ tribal development corporations, KVIC/ KVIB, state level cooperative societies/ federations, co-operative marketing/ processing and industrial societies, joint sector undertakings, registered societies in KVIC/ KVIB fold.

b) Public/ private limited companies, partnership firms and proprietary concerns.

Items eligible for term-loan assistance


Cost of land (upto the limit of margin to be brought in by the borrower), site development, construction of worksheds/ building, plant and machinery, equipment and tools, cost of technology upgradation, technical know-how and engineering, preliminary and pre-operative expenses, project formulation and consultancy fees, acquisition of transport vehicle, preservation including cold storage, packaging and marketing, etc.


Repayment period

3 to 10 years with moratorium of 12 months.

Debt Equity Ratio - 3 : 1
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National Bank for Agriculture and Rural Development
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Investment Credit Department


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