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Tech Based Aid for Farmers in India

Tech Based Aid for Farmers in India

June 23, 2022

Agriculture is the backbone of the Indian economy and therefore the problems faced by this industry have been crucial topics of discussion. The uncertain nature of this industry results from a number of reasons including:

  • Poor infrastructure & farming techniques, low use of farm technologies etc,
    ultimately resulting in low productivity. Consequently, the emergence of digital agriculture- a term used to refer to the use of digital technologies in managing the business of agriculture- is proving to be a boon for farmers today.

Some of these initiatives in India include:

  • The initiation of the Digital Agriculture Mission 2021–2025, by the Union Minister of Agriculture & Farmers Welfare, which aims to support and accelerate projects based on new technologies, like AI, block chain, remote sensing and GIS technology and use of drones and robots.
  • Sites such as eNam- National Agriculture Market, DBT- Direct Benefit Transfer Central Agri Portal, eChoupal-kiosks located in villages for access to the internet, have been developed to promote the use of technology among farmers.
  • AgriStack – a collection of technology-based interventions in agriculture, United Farmer Service Platfrom (UFSP), Esagu and Agrisnet are among some of the other famous platforms based on e-technology.
  • Further, the Jio Krishi Platform launched in February 2020 helps digitise the agricultural ecosystem along the entire value chain to empower farmers; The platform uses stand-alone application data to provide advisory, the advanced functions use data from various sources, feed the data into AI/ML algorithms and provide accurate personalised advice.

As a company committed to combine traditional agri knowledge with transparent credit and tech-driven insights to help farmers, with a similar goal of adding value along the entire value chain, Agriwise’s new platform, Fininza (fininza.in/) utilises some of these newer technological advancements. The platform works to smoothen the lending process and provide access to all loan details under one roof.

“Technology can make farmers’ lives easier, predictable and profitable, and increase food production”, said Ram Kaundinya, director general, Federation of Seed Industry of India (FSII). Today, the world is witnessing technological advancements at a rate faster than ever. Big data, Artificial intelligence, Deep learning etc are some of the tools that can be utilise to the advantage of farmers and pave way for economic prosperity in the country as a whole.

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Innovations in Agri-Credit Systems

Innovations in Agri-Credit Systems

June 20, 2022

The Indian Agri-credit system has made commendable progress with the enforcement of some major policy changes over the years. Credit supply is one of the most integral determinants of investments in agriculture due to the degree of uncontrolled production and price risk that can influence the industry which makes the progress of Agri-credit systems more crucial than ever.

Policy changes have helped strengthen such progress; A number of innovative methods like the Kisan Credit Card Scheme, SHG bank linkage groups, JLGs and FPOs had been promoted for financial inclusion under institutional structure of which all saw great success other than the formerly mentioned KCC.

Further, this problem of farmer’s access to credit is being resolved by the leap from Agritech to Agri-fintech. Even though technology cannot resolve the root issue in its entirety, its implementation is creating a space that facilitates solving issues pertaining to data, digitalisation etc. Data has proven to be a boon which helps NBFCs check the Farmer’s identity, credit records and facilitates the process of determining interest rates and providing the loan. Some of these data points also constitute the foundation layer of Agristack, as proposed by recently released IDEA (Indian Digital Ecosystem for Agriculture) framework by Government of India3. Further, digitalisation has enabled companies to capture crop health, soil health, quality of produce- all of which are important determinants in assessing the creditworthiness for Agri loans and for enabling the process of underwriting among lending institutions.

Similarly, since the late 1990s, organisations have developed innovative approaches to financing agriculture including microfinance concepts, used good banking products drawing on knowledge of agriculture to enter and succeed in this market. No single approach works for all situations but a combination of many of these approaches have shown great promise. Some other innovations in agricultural credit markets include the warehouse receipt financing, value chain financing, leasing, contract farming and producer companies.

At Agriwise, we are more than just a provider of Agri finance. We understand Agri and allied businesses, their challenges and opportunities. We know Agri customers require not just finance, but also knowledge and expertise to grow. Agriwise has adapted to these innovations over the years by strengthening our product offerings which include:

  • Agri Term Loans
  • Warehouse Received Finance
  • Supply Chain/ Invoice Finance
  • Equipment and Input Finance
  • Working Capital Facility.

We combine traditional Agri knowledge with transparent credit and tech-driven insights to help farmers and Agri & allied businesses to reimagine the future.


A number of Agritechs today have demonstrated that lending to farmers/ FPOs is doable at scale with the integration of smart data intervention, market linkages, partnerships and phygital approach. Agri-credit systems are critical and an effective means for the development of rural India. Consequently, innovations in the agricultural credit market have gained importance over the years. Future innovations and reforms should be designed in a manner that would further help resolve challenges faced in the Agri Finance sector and facilitate the process of lending loans.

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Rajasthan Government implements reform norms for the PM Kusum Yojana to boost solar energy

Rajasthan Government implements reform norms for the PM Kusum Yojana to boost solar energy

June 15, 2022

The PM Kusum Yojana was introduced by the central government in 2019. Under this scheme, the central government of India will provide Kusum solar pump sets on a subsidised basis. These solar pumps have two purposes: They help farmers with irrigation and allow them to generate electricity. The government will provide a subsidy of 60% to farmers and 30% of the cost will be given by Government in form of loans. Farmers will only be responsible for 10% of the total cost of the project.

Now, the Rajasthan government launched the Kusum scheme with certain reforms. The Industries Department of Rajasthan said that it would provide subsidies on interest of 30% of cost formerly mentioned- that is the 30% being given in the form of loans. The Rajasthan Renewable Energy Corporation Limited said that the problems being faced by farmers under Kusum Component (which states Addition of 10,000 MW of solar capacity through installation of small solar power plants of capacity up to 2 MW) in the state will be resolved. For this, the Rajasthan Renewable Energy Corporation has started listening to the problems of the farmers.

Under this Kusum Scheme 2022, 17.5 lakh diesel irrigation pumps running in the first phase will be powered by solar energy in order to reduce the consumption of diesel. Irrigation pumps running on solar energy would result in no net loss in the agricultural output. Rajashthan’s Kusum Yojana 2022 will be especially good for those farmers where the state is drought-prone and there exists a problem of electricity. Under the Rajasthan Kusum Yojana, about 10 lakh diesel and petrol powered irrigation motors will be replaced.

Reasons for implementing reforms and promoting the scheme:

  • Day time reliable power for irrigation for farmers.
  • De-Dieselization by Replacing Diesel Pumps with Solar Pumps, Promoting renewable energy in light of the 2015 Paris Climate Agreement.
  • Enhancing Farmers Income under component C: selling surplus energy to DISCOMS at a pre-determined rate.
  • Curbing Climate Change
  • Boosting Domestic Solar Manufacturing
  • Reducing the Import Bill, considering India’s petroleum import bill is large and on the rise. Another incentive to be self-reliant.

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Agri NBFCs should be accorded priority sector status since they cater to a priority sector. Currently, they are treated at par with other NBFCs.

Agri NBFCs should be accorded priority sector status since they cater to a priority sector. Currently, they are treated at par with other NBFCs.

June 10, 2021

Priority sector lending (PSL) was formalized in 1972, and RBI advised PSL targets to banks in 1974, which ensures that the lenders compulsorily lend 40% of their total credit to specific sectors. The Reserve Bank of India (RBI) has defined different categories under priority sector and agriculture is one of that category which falls under priority sector lending. Domestic scheduled commercial banks excluding Regional Rural Banks (RRB) and Small Finance Banks (SFB) and Foreign banks with 20 branches and above have a target of 18% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. Within the 18 percent target for agriculture, a target of 8 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher is prescribed for Small and Marginal Farmers. The activities covered under Agriculture are classified under three sub-categories viz. Farm credit, Agriculture infrastructure and Ancillary activities.

Bank credit extended to registered NBFC-MFIs and other Microfinance institutions (MFIs) such as societies, trusts etc. which are members of RBI recognised Self-Regulatory Organisation (SRO) for the sector, for on-lending to individuals and also to members of Self Help Groups (SHGs) / Joint Liability Group (JLGs) will be eligible for categorisation as priority sector advance under respective categories of agriculture subject to conditions specified in para 21 not applicable to RRBs, UCBs, SFBs and Local Area Banks (LABs). Bank credit to registered NBFCs (other than MFIs) towards on-lending for ‘Term lending’ component under agriculture will be allowed up to Rs. 10 lakh per borrower subject to conditions specified in para 22 and 24 (not applicable to RRBs, UCBs, SFBs and LABs).

In order to provide greater operational flexibility to banks and NBFCs for reaching out to priority sector, a revised scheme, renamed as co-lending model (CLM) was introduced, effective November 5, 2020. The primary focus of the revised scheme is to improve the flow of credit to the unserved and underserved sectors of the economy and make available funds to the ultimate beneficiary at an affordable cost, considering the comparative advantage of lower cost of funds of banks and greater reach of NBFCs.

The Government of India (GoI) fixes the agricultural credit target every year for commercial banks, RRBs and rural co-operative banks. During 2020-21, against the target of Rs. 15 lakh crore, banks achieved 75.1 per cent of the target (Rs. 11.27 lakh crore) as on December 31, 2020, of which commercial banks, RRBs and rural co-operative banks achieved 78.6 per cent, 74.2% and 59.3%, respectively, of their targets.

RBI Targets and Achievements for Agricultural Credit Commercial Banks Rural Co-operative Banks RRBs Total
Target Achievement Target Achievement Target Achievement Target Achievement
2019-2020 9,72,000 10,61,215 2,02,500 1,49,694 1,75,500 1,62,857 13,50,000 13,73,766
2020-2021 (April-December) 10,81,978 8,50,543 2,25,946 1,33,976 1,92,076 1,42,603 15,00,000 11,27,121
  20,53,978 19,11,758 4,28,446 2,83,670 3,67,576 3,05,460 28,50,000 25,00,887

In sum, during the year, the Reserve Bank implemented the recommendations of the Expert Committee on MSME and the Internal Working Group on Agricultural Credit to improve inclusiveness and also enhance flow of credit to these sectors. Further, revised Master Directions on PSL were issued to harmonise the various instructions. Co-lending was introduced to improve the flow of credit to the unserved and underserved sectors of the economy at an affordable cost and scale up of the pilot CFL project was initiated to cover the entire country in a phased manner. Going ahead, the implementation of the recommendations laid down under the NSFI document and strengthening financial literacy will be the key areas of focus for the Reserve Bank.

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Agri-financing – A financial revolution

Agri-financing – A financial revolution

May 21, 2021

Agri financing plays an essential role in farm sector development, as India being an agrarian economy is a major contributor to the global food basket. As on March 31, 2020, NBFCs had total assets of Rs. 51.47 trillion, almost 25% of India’s GDP. Therefore, a healthy NBFC sector from a systemic point of view is crucial for India’s economic revival. The recent RBI bulletin released in May 2021 states that India’s NBFCs did register a year-on-year (y-o-y) growth of 13% and 11.6% in the second and third quarter of 2020-21 despite the ongoing pandemic. This shows the sector’s resilience, as they were quick to adopt technology, policy support, and sensibly strong fundamentals.

The Food and Agriculture Organization (FAO) mentioned on May 6, 2021 that its Food Price Index in April 2021 rose 30.8% higher as compared to its level in the same month last year. India is among the world’s leading producers of many commodities such as dairy, cereals, spices, fruits and vegetables, rice, wheat, cotton, etc. India’s exports of agriculture and allied commodities for 2020-21 (April-February) was up by 18.35% at Rs. 2,69,241.41 crores as compared to the same period last year was Rs. 2,27,493.43 crores. The recent rally in global commodity prices and the prices of commodities in India being fairly low in comparison, led to a boost in farm exports, giving rise to many businesses in the agri sector.

There are enormous opportunities in the agricultural sector and Agri financing has that potential to transform the agricultural sector in a massive way. By targeting the excluded segments of the farming community with the help of modern technological advances can pave the way towards making Agri financing more far reaching. The widespread access to affordable smart mobile phones has already led to a shift in the way farmers have access to price information, buyers, sellers, markets, etc. This has given rise to many Agri Fintech, professional tech-enabled Agri services companies, etc.

One such example is Agriwise Finserv Ltd, which has been one of the leading NBFCs in agri financing space, registered with the RBI as a Systemically important-Non Banking financial institution (SI-NBFC). We have disbursed Rs. 1,250 crores worth of loans as on March 2021 and serviced over 2,800 clients. Usually securing finance can often become a daunting task, given the complexities in the process, but at Agriwise we have made agri-financing simpler, easier and faster. A three-step application process and 24-hour approvals, ensures that access to finance is not a barrier in a progressive farmer’s growth.

In order to reduce turnaround time, facilitate spontaneous and automated decision making, aid in optimization of resources and processes, and ensure accessibility of credit to farmers at rates custom-made to their socio economic profile can be possible only if technological innovations across value chains are adopted.  This would give NBFCs an advantage over institutional banking systems and drive maximum possible growth. The success of agri NBFCs largely depends on their ability to make best use of technology, human capital and strategic partnerships. A combination of NBFCs having a large customer base and FinTech companies having the right technological support; together, can form a mutually beneficial relationship to increase the processes of helping farmers secure credit.

How finance can empower the agri-community to grow

How finance can empower the agri-community to grow

October 22, 2020

The Indian agriculture market is estimated to be worth INR 18,367 billion (2019). Currently, India ranks within the world’s five largest producers of over 80% of agricultural items, including many cash crops. Easy availability of credit is a major driver of the Indian agriculture industry. Many farmers and agribusinesses do not have access to timely and suitable credit leading to lower production and productivity. Moreover, a large part of the farming community is trapped in poverty.

Here are 5 ways in which the right credit facilities will empower the agri-community to prosper –

1. Increase in production and productivity

Due to farmers’ financial constraints, they are unable to invest in farm activities. With credit facilities, tie-ups with technology partners and product development partnerships, the agri-ecosystem can implement modern techniques in farming, use high-yielding seeds and implement modern pest control methods and fertilizers. Other activities in the agricultural value chain like storage, manufacturing of inputs and equipment, distribution, and marketing will get a boost too, leading to improvement in quality and quantity of production.

2. Improvement of finances for FPOs

Small farms face constraints like procuring inputs and equipment at reasonable prices, lack of bargaining power, and realising better value for their produce. Small producers can collectively form a Farmer Producer Organisation (FPO). They can utilise scale for better bargaining power and selling power. Agri-finance players provide loans at different stages. They give credit for FPOs’ incubation, expansion of FPOs, and quality improvement and innovation to matured FPOs. This unlocks value for all stakeholders in the agri-community.

3. Promotion of financial inclusion

Financial products and credit processes designed to match the needs of small and marginal farmers will allow them to invest in their farms, improve production, and participate in sales and distribution processes that are favourable to them. Micro-credit of different tenures will help agri-allied labourers and small agricultural processing companies to develop micro-busines activities better. Expanding access to affordable financial products and services for rural populations will lead to their financial inclusion.

4. Engaging youth in agriculture

The fragmented and disorganised nature of activities in the agriculture sector and the seemingly low perception of economic advancement in agriculture keeps the youth away. Innovative credit solutions for agriculture and small businesses will encourage the youth to look at agriculture and related activities in a positive light. With start-up capital, financing for producing and marketing innovative products, and promotion of e-business, they can be encouraged to take up agriculture as a career, and the agri-community will grow.

5. Value chain financing

The agricultural sector has many players in the value chain – producers, agri-input dealers, equipment manufacturers, agri-processing companies, and distributors. Lack of finance to any of these players hurts the agriculture value chain. Agri-finance players who have in-depth knowledge of the business cycle can support them by meeting their financial needs and removing operational obstacles. Timely and accessible financial solutions enable the entire agricultural value chain to be cost-efficient, maximise product value, and become globally competitive.

Expansion of financial access to key stakeholders in the agricultural value chain augments production, enhances productivity, reduces poverty, and triggers a balanced regional development.

5 things to look for when availing an agri-finance loan

5 things to look for when availing an agri-finance loan

October 15, 2020

The agriculture sector contributes significantly to the Indian economy in terms of revenue and employment. It makes for around 16% of the Indian GDP and 41.49 percent of the workforce employment. But farming and related commercial activities are tough. It requires labour, supplies, land, and equipment. It also faces risks like vagaries of weather, shrinking farm sizes and pest infestation.

Limited finances to manage these factors and mitigate risks, make it even more challenging. Agri-financing provides credit for the smooth functioning of all activities and organisations in the farming sector. But it is important to identify the right agri-financing partner.

Here are some factors to consider before taking an agri-finance loan-

1. Understanding of the Agri Business:

A lending partner who understands the unique challenges of the agri sector can provide the right credit solution. A financier who recognises the risks of the business and suggests steps to manage the risks should be preferred over a lender who is interested in just lending and the repayment. Choose a partner who extends credit in terms of financing, consultation for referrals, partnerships, and fulfilling your business objectives.

2. Flexible repayment options:

Agriculture is dependent on seasons and weather conditions. Check if the finance company offers flexible repayment options. Some options beneficial for agri-businesses and farmers are-

  • Repayment tenure in-line with the harvesting season or when products are ready for sale.
  • Loans with an initial grace period.
  • Flexibility in making full or partial prepayments with zero or minimal penalty.

A lender who is forward-looking and is flexible to provide finances for the evolving needs of an agribusiness will be a good fit in your overall business plan.

3. Innovative financing solutions:

Traditional loan solutions may not always suit farmers and agri-businesses. Agriculture is transforming, which means there are new processes and technology requirements. An agri-finance company that understands the agricultural value chain and the business interests of the stakeholders involved is the key. The focus should be on empowering the agri ecosystem with customised credit solutions.

Some firms provide financing against warehouse receipts. Others offer inbuilt weather-based insurance. Microfinancing against a variety of collateral and credit guarantee schemes are other solutions. Borrowers should study these lines of credit and select the one that is most suitable for their requirements.

4. Easy processing and documentation:

It is advantageous to partner with agri-finance players who understand the business cycle and provide better value in terms of ease of processing and speedy disbursals. The loan eligibility criteria and documentation should be easily manageable. Loan documentation should be transparent so that it elucidates the rights and responsibilities of both parties. It is also crucial to look for a customer support line for queries and service requests.

5. Interest rate:

Compare the interest rate on the loans offered by various financial institutions and choose the one with the most attractive interest rate provided the other terms and conditions of the loan are befitting. A lower interest rate means the cost of the loan is lower and, therefore, a lesser debt burden. But some loans with a lower interest rate may have steeper processing fees or a higher penalty for default. Look for attractive interest rates but do remember to check other expenses.

The agri-financing sector is seeing a paradigm shift with new players entering the market. They aim to simplify the financing journey with solutions based on traditional wisdom and tech-driven insights. It important to choose an agri-financing partner wisely.