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Transforming Retail Lending for Agriculture: Innovation for India's Farmers

Discover how the digital revolution is transforming the agricultural lending landscape

Agriculture is reaching new heights with AgriTech leading the charge. The digital shift is being termed as the third green revolution in India. While digital innovation is helping businesses explore untapped markets in agriculture, simplified lending for farmers has helped banks emerge as benefactors in this transformation.

For expansion in rural markets, digital lenders need to understand how farmers’ successes are a direct outcome of higher accessibility to the booming digital ecosphere.

In rural areas, new technologies have helped agriculturists change their outlook toward markets and adapt profitable practices for maximized produce. Here, multiple startups have connected the dots to make way for new success stories.

Majorly, the dots are eco-friendly technology-driven farming processes, data-backed farming choices, and farmer empowerment at every step.

Currently, the Indian agriculture market has been valued at INR 55,994 billion in 2020 and is expected to grow to an approximate value of INR 111,916 billion by 2026.

In one of the biggest global agriculture markets, one question that’s benefiting banks is – how can we simplify borrowing for farmers? To answer this, a close look at technologies that farmers are adopting could help banks better understand the data that helps lend better.

How Is India Changing: Who’s Stepping in with Big Ideas?

Firstly, we need to recognize the business outlook towards the sector. It's following a global shift. With environmental and sociological consciousness on the rise, every partaker recognizing business opportunities aims to adhere to ESG investing.

ESG investing - Environmental, Social, and Governance investing is used to screen investments based on corporate policies and to encourage companies to act responsibly.

For investors, this translates to – maximum productivity from an eco-friendly approach, which also includes the economic well-being of the most crucial contributors – the farmers.

Following suit, the biggest grocery deliverers are offering farm-to-home products, and are doing their part in supporting farmers. Moreover, the government of India has pushed for entrepreneurs to step in and take decisive actions for the strategic growth of farmers.

One key recommendation is the project called ‘Startup Agri India,’ under which businesses have opportunities to innovate fearlessly for agriculture advancement.

The act will be a part of the government’s critical plan to ‘increase farmers’ income by 2022, under which Banks could keep an eye out for the following goals set for farmers' well-being –

  • Growing more crops from the same land

  • Improving the quality of milk, meat, and eggs

  • Using resources more effectively

  • Spending less money on making products

  • Growing crops more often on the same land

  • Growing different, more valuable crops

  • Getting better prices for the products farmers sell

  • Moving from working on farms to other jobs in production

What Technologies Simplify Lending in Agriculture?

A silent revolution is underway for agriculture, and banks are the biggest benefactors with their offerings of digital loans.

But as the market’s competitiveness increases, multiple lenders will soon step in to help 145 million aspirational rural customers whose cross-selling opportunities grow by the day.

Insurance-Secured Digital Loan Processes for Crop

Majorly, crop insurance is catching on as a preference. Insurance firms and banks could make use of advanced remote-sensing technologies for timely and accurate estimations.

In India, data analytics companies like SatSure integrate satellite, weather, and IoT (Internet of Things) analytics to help farmers with financial security and crop insurance.

Currently, similar solutions are being used by many banks and insurance firms.

Internet of Things (IoT) for Better Predictions

Further, as digitization increases, banks, governments, and other stakeholders can now tap into the vast world of data analytics for informed decisions on policies, products, processes, cross-selling opportunities, etc.

The increasing sophistication of sensors, internet-enabled connectivity devices, simplified software applications, and cloud data storage, together, facilitate data to be captured, stored, and processed by decision-support tools aiding in planning for agricultural activities that offer the best outcomes.

Precision farming is an upcoming application of IoT in Indian farming. Agricultural practices can be planned extremely well by including processes for real-time crop and soil condition monitoring, plant health tracking, weather prediction, and more.

An end-to-end IoT solution for the management of fresh foods, Qzense uses IoT for fast and precise quality grading by capturing insights on spoilage, shelf life, and ripeness, ultimately helping farmers achieve higher margins from the same produce.

Predictive Analytics for Crop, Farms, Climate, and Markets

A majority of agricultural markets are imperfect, as they lack good communication infrastructure, especially information databases. Moreover, the prices of crops are unknown at the time of planting as well as knowing their demand at the time of their sale is difficult.

This is changing, as the industry can now use predictive analytics for better calculations like understanding how many other farmers are planting a specific crop as well as how will average yields fare in any given year.

Risk-based evaluation software for lending to agri-sectors identifies distress when banks factor in a structured risk assessed at the farmer's level. It also helps in improving targeting, transparency, de-duplication, efficiency, and inclusiveness under farmer welfare programs.

Apart from that such software can also account for, major risks like climatic risk in the occurrence of drought, excessive rainfall, temperatures, hailstorms, etc.; risk of pests and diseases; intrinsic risks related to farm management.

Explore our digital lending solution, CRisMac Krishak, an agri lending solution, and discover how it empowers banks to simplify lending for farmers and drive growth in untapped agri-markets through digital innovation.

Learn more about the crucial role of enhanced accessibility to the digital ecosystem for rural market expansion and farmers' success in India.

Contact us to know more about CRisMac Krishak.


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