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.