NFS policy by TSCAB | TSCAB
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NFS policy by TSCAB


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1. Eligibility criteria for sanction of Limit:

  1. DCCBs complying with CRAR norms and Section 11(i) of BR Act 1949by DCCBs would be eligible for refinance.
  2. Compliance with CRAR norms:
    • No refinance would be available to DCCBs having CRAR below 7% as on 31.03.2016. For unrestricted refinance facility, the net NPA shall be not more than 6.00% as on 31.03.2016. Further, in case there is improvement/deterioration in any of the financial parameters as on 31.03.2017, the same will be reckoned for eligibility of refinance.
  1. Compliance of Section 11(i) of BR Act 1949 by DCCBs:

    • No refinance would be available to Section 11(i) non-compliant DCCBs.
      SCBs will be eligible for availing refinance in respect of section 11(i) non-compliant DCCBs provided the Bank has been exempted by GOI from complying with the requirements of said section of exemption application along with the Action Plan submitted by the Bank has been forwarded by NABARD to RBI for favourable consideration and the same is not pending with RBI/GOI for more than 1 year. Drawals would, however, be permitted for such Bank only upto the period of exemption.
  2. Audit: Audit of DCCBs for the year 2015-16 should have been completed and relative audit reports along with financial statements should have been received by TSCAB. The DCCBs with ‘A’ or ‘B’ classification for the year 2015-16 are only eligible. The DCCBs with audit classification ‘C’ and ‘D’ for the year 2015-16 will not be eligible for refinance.

Further, the Audit of DCCB for the year 2016-17 should have been completed by 30.09.2017.
Sanction of allocation to DCCBs with Audit rating ‘C’ or ‘D’ can be considered, when such DCCBs improve their Audit rating to ‘A’ or ‘B’ for the year 2016-17
In case there is any improvement in any of the parameters for the year 2016-17 as per audited figures, the same will be reckoned for eligibility of refinance to DCCBs.
2. Allocation to DCCBs.

  1. The allocation under NFS for the year 2017-18 by TSCAB is worked out on the basis of last year’s refinance availed by DCCBs from TSCAB.

  2. The DCCBs may work out the Realistic Lending Programme for 2017-18 and in case of need may approach TSCAB for additional allocation, after exhausting the allocation already made duly submitting the application in the prescribed format supported by the Board Resolution and specific request.

3. Activities for financing:
The coverage of Non-Farm Sector activities is wide as new activities are coming up on a continuous basis with reference to creation of employment opportunities, either directly or indirectly, that generates income. The eligible schemes covered can be broadly categorized as below, in addition to 22 broad approved groups of financing:

  1. Enterprise loan scheme: under the scheme refinance is provided to meet Block and Working Capital requirements of the borrower/units.

  2. Business/Entrepreneurs/units covered would include proprietorship/partnership firms running as small manufacturing units, shop keepers, fruits/vegetables sellers, hair-cutting saloon, beauty parlours, transporters, truck operators, hawkers, co-operative or body of individuals, food service units, repair shops, machine operators, small industries, artisans, food processers, self-help groups, professionals and service providers etc. in rural and urban areas and any other eligible purpose under NFS.
  3. Credit support will be extended by TSCAB in the following sectors also:




Activities (as illustration)


Educational services

  • Educational institutions such as schools, colleges set up privately.

  • Educational loans to students.


Health services

  • Hospitals/clinics, health care units set up in rural areas, mobile hospital vans with necessary equipment, etc.,


Construction sector

  • Building material supply Bank.



  • Shops/Marketing outlets for rural products


Tourism services

  • Theatres, Eco-tourism, Fair/Exhibition complex etc.




  • Two wheelers, three wheelers and four wheelers.


Information Technology

  • All activities providing information and technology to rural people like:

  • IT equipment manufacturing units like PCs, servers etc.,

  • Networking equipment like PCs, Servers etc.

  • Other IT or electronic components, IT services like Business process Outsourcing (BPOs)/Call centers or both.

  • Software services and products, embedded software.

  • IT infrastructure providing centers like telecom centers or IT connectivity providing centers.

  • Computer education/training centers.

  • All employment generating rural technologies.


Infrastructure projects

  • Rural Industrial Centers, Growth Centers, Communication Networks, Rural Safe Drinking Water etc.,


Housing/Real estate mortgage loans (REML)

  • Construction of houses in rural and urban areas, repairing, modification, loans against mortgage of real estate (REML), etc.



  • Small petty traders, hawker, sanitary, hardware, any other micro businesses, etc.

Further, it may be noted that the TSCAB has approved all sectors/ activities including all the areas of rural service sector activities that provide employment opportunities (directly or indirectly)/generate income and improve the living conditions of rural people are eligible for refinance support under the NFS. The refinance from TSCAB is available not only for financing new units but also for modernization, expansion/renovation/diversification of existing units.
4. Credit Appraisal:
Banks may conduct a thorough Credit appraisal to avoid under or over- financing. Suitable assessment tools may be applied for the purpose of processing of NFS units. Banks may adopt flow of flexible credit after ensuring regular Banking Norms such as Financial Viability/Technical Feasibility/Bankability (Assessment of Block and Working Capital), RoI, Margin, Security, Documentation, etc.
5. Extent of refinance:
80% refinance will be provided by TSCAB to the DCCBs on the disbursements, subject to fulfillment of other requirements prescribed from time to time. The refinance from TSCAB will be by way of Term Loans only. The DCCBs should ensure compliance with the unit-wise and sector-wise ceiling under exposure norms as per NABARD guidelines on Credit Monitoring arrangements.
6. Repayment period:
i) The repayment period is normally fixed for three years by TSCAB to DCCBs, with six half yearly installments and Interest chargeable on the outstanding amount on 31 March and 30 Sept. each year. Any advance repayment i.e., prior to the prescribed due date will attract prepayment charges of 2% over and above normal rate on outstanding at the time of pre-closure.
7. Security
DCCB shall obtain adequate security for the loan. Alternatively, agricultural land security shall also be accepted. The DCCB shall take all such necessary steps for obtaining proper security to cover all legal aspects at their level to ensure recovery of loan.
8. Preferring claims/drawals from TSCAB:
a) After disbursing loans to eligible borrowers/groups the DCCB should prefer drawals with the following documents:

  1. Letter of Acceptance of Terms and Conditions for drawal under NFS.
  2. DP Note for the total amount of claim/drawal.

  3. Loan agreement for the total claim.
  4. Resolution of the Board of Management of the Bank approving the refinance claim.
  5. Time promissory notes (for 6 instalments).
  6. Usance promissory note for the total claim.
  7. Schedule of repayment of the present drawal/claim.
  8. Latest Unit-wise quarterly DCB (demand, collection & balance)
  9. Certificate by the CEO/GM of the DCCB stating that the norms prescribed by TSCAB are adhered to.
  10. Branch-wise, purpose-wise, borrower-wise, disbursements of loans with reference to rate of interest charged.
  11. DCCBs should furnish NOC/No overdues Certificate.
  12. DCCB should certify that all the loan documents executed by NFS are under the custody of concerned Branch Manager.
  13. The minimum recovery percentage is fixed as 80% for securing

refinance from TSCAB.

  1. DCCB shall furnish monthly NODC.
  2. The outstanding borrowings under the purpose shall be covered adequately by NODC.
  3. Certificate that the CCB has not availed refinance earlier for this amount.

9. Rate of interest:
The rates of interest on refinance to DCCBs is 10.00% p.a.

* The interest rates are subject to change based on revision by TSCAB from time to time.

* Penal interest on the overdues will be applicable as in the case of schematic lendings/investment credit.

10. Others:

  1. The DCCBs should furnish the monthly returns/progress reports before 3 of every succeeding month in the format and ensure submission of quarterly DCB position/recovery (March, June, September and December).
  2. If, there are any overdues from DCCB, the drawal application cannot be entertained and as such, the DCCB should ensure liquidation of all overdues, if any, before sending the drawal application.
  3. The DCCBs should ensure compliance with the unit-wise and sector-wise ceiling under exposure norms as per NABARD guidelines on Credit Monitoring arrangements.