Refinance 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. The refinance facilities available from NABARD for RNFS are as under :
Investment Credit
NABARD provides refinance under Investment Credit to eligible banks for a wide spectrum of manufacturing, processing and service sector activities under Rural Non-Farm Sector. The various refinance schemes of NABARD, inter-alia, cover the entire manufacturing, processing and approved service activities in the SSI sector with emphasis on Cottage, Village, Tiny Industries, Rural Artisans and Rural Crafts.
As new activities are coming up on a continuous basis, it has become imperative to cover such activities under our refinance. In order to facilitate a dynamic Non-Farm Sector, all activities in rural areas or benefiting rural areas that are income generating and/or employment generating, including all service sector activities, are made eligible for availing NABARD refinance assistance under NFS (Investment Credit). However, the schemes/ proposals are to be technically feasible and financially viable for drawal of refinance.
Refinance Schemes for banks under Non-Farm Sector
Refinance to banks will be provided under:
Automatic Refinance Facility (ARF), i.e. without submission of schemes/ projects for prior sanction by NABARD upto a prescribed level, and
Pre-sanction procedure i.e., the banks will have to submit scheme/project proposals to NABARD and get them sanctioned before disbursement of loans to their borrower clients.
(i) Refinance under Automatic RefinanceFacility (ARF)
The following three schemes are available under ARF:
Refinance under Pre-sanction procedure
For schemes/ projects exceeding the refinance limits prescribed under ARF i.e. Rs.50 lakh for Commercial Banks and merged RRBs and Rs 20 lakh for other banks, refinance will be provided under pre-sanction procedure, i.e. the banks will have to submit scheme/ project proposals to NABARD and get them sanctioned before disbursement of loans to their borrower clients. The units so financed shall conform to the investment outlays stipulated for SSI units by the Govt. of India.
Besides the above, refinance is provided to the following Government sponsored programmes :
- ISB component of Swarnjayanti Gram Swarozgar Yojna (SGSY) for taking up Industries, Services and Business activities (through all banks).
- Prime Minister's Rozgar Yojna (PMRY) through CBs under SGSY allocation.
General Terms & Conditions
Eligible institutions
Commercial Banks (CBs)
- Regional Rural Banks (RRBs)
- State Co-operative Banks (SCBs) / District Central Cooperative Banks (DCCBs)
- State Co-operative Agriculture and Rural Development Banks (SCARDBs)/ Primary Co-operative Agriculture and Rural Development Banks (PCARDBs)
- Scheduled Primary (Urban) Co-operative Banks (PUCBs)
Interest rates on refinance ...
Rate of refinance to banks i.e., quantum...
Special Project Areas (DRIP, APRI, Clusters) North - Eastern Region and Sikkim State and Externally Aided Projects - 100% upto ARF. ARWIND and MAHIMA - 100%.
Ceiling on Refinance and Project Outlay
Refinance is available under Automatic Refinance Facility (ARF) upto certain limits and beyond that under pre-sanction procedure. The limits for refinance under Enterprise Loan Scheme and SRWTO under ARF are fixed for different agencies as under :
Agency |
Refinance limit to single borrower |
Ceiling on project outlay |
CBs |
Rs 50 lakh |
Assistance extended to the entire SSI Sector/ Service Sector eligible. No ceiling on project outlay. |
Amalgamated RRBs |
Rs 50 lakh |
Assistance extended to the entire SSI Sector/ Service Sector eligible. No ceiling on project outlay. |
RRBs (original)/ SCBs/Scheduled PUCBs |
Rs 20 lakh |
Assistance extended to the entire SSI Sector/ Service Sector eligible. No ceiling on project outlay |
SCARDBs |
Rs 20 lakh |
Assistance extended to the entire SSI Sector/ Service Sector eligible. Project outlay ceiling not to exceed Rs 30 lakh |
Note : For Co-operative Banks, the individual loan limit will be as per instructions issued from time to time .
Location
Refinance is available to banks in respect of finance provided by them to units located in rural areas as defined in the NABARD Act 1981. ‘Rural Areas' cover all villages irrespective of their population, and towns with population not exceeding 50,000 or such other figure as the Reserve Bank of India may specify from time to time.
Promoter’s margin
Promoter’s/ borrower’s contribution / margin as prescribed by RBI from time to time.
Security
The security norms shall be as prescribed by RBI from time to time.
Conditionalities for refinance
Drawal of Refinance
Eligible Institutions may draw refinance as per the revised format (ARF-Format II) communicated to all banks vide letter No.NB/ICD/1595/PPS-4/2005-06 dated 30 November 2005 .
Flow of Refinance for Non-Farm Sector (Investment Credit) over the years
(Rs. in crore)
Year |
Investment credit |
Year |
Investment credit |
Year |
Investment credit |
Of which for Rural Housing* |
| 1986-87 |
16 |
1993-94 |
328.94 |
2000-01 |
1022.02 |
- |
1987-88
|
45
|
1994-95
|
411.08
|
2001-02
|
1615.97
|
501.86
|
1988-89
|
59
|
1995-96
|
460.36
|
2002-03
|
2007.4
|
769.53
|
1989-90
|
62
|
1996-97 |
644.68
|
2003-04
|
2363.22
|
1030.23
|
1990-91
|
80
|
1997-98
|
616.67
|
2004-05
|
2542.58
|
1276.94
|
1991-92
|
104
|
1998-99
|
653.95
|
2005-06
|
2285.98
|
1242.8
|
| 1992-93 |
184 |
1999-2000 |
837.42 |
2006-07 |
2265.16 |
1087.63 |
|
