Further , banking activity involving lending to small farmers is plagued by various limitations like higher acquisition and servicing costs for marginal farmers and a greater risk of loan default . There are other problems that banks have faced , like difficulty in gathering farmlevel data and getting information such as the cash flow and credit history of farmers . This is where the role of Agri-focused NBFCs & Fintechs becomes critical . They have leveraged technology to derive essential insights into the farm domain and individual farmers to give out loans seamlessly and fairly . They also quickly offer credit to the farmers through lower paperwork and documentation . Adopting advanced analytics and rural market intelligence helps them bring efficiencies in the lending mechanism and cut the time taken to disburse a loan .
The various purposes for which agri-dedicated NBFCs lend money to the farmer include loans for equipment and machinery , modern and efficient methods of irrigation , and various other components in the value chain of cultivation . They have also brought down the interest rate of loans to as low as 12-18 percent compared to 24-60 percent available in the informal credit system in the vast rural parts of India . The use of modern technology to draw estimates of loan demand , visibility of usage of credit , tracking irrigation facilities , etc ., to come up with the exact products and offerings for the farmers are another set of distinct advantages these NBFCs offer .
Future roadmap
It ' s time the policymakers support such NBFCs who are charged up to bring radical and profound changes to the formal farm financing . The major challenge these NBFCs are trying to tide over is inclusion under reforms that currently are limited to banks and their Agri credit business . The policymakers must ensure that agri-focused NBFCs & Fintechs are included in effective programs such as the government subsidy schemes , a benefit hitherto available only to the banks . It will enable them to lend efficiently , and mitigate farmers ' credit requirements , thereby supporting their income growth . It will also go a long way in boosting agriculture financing and help India dominate global leadership of the agrarian economy .
Prabhat Chaturvedi has over two decades of diverse experience in the financial services sector and has held key management positions at leading global financial institutions . Under his strong leadership , NAFA is witnessing rapid progress to become one of the prestigious NBFC offering customized financial solutions to the entire value chain of the smart irrigation system in India . Having strong roots in finance & planning , strategy building , and analytical strengths , Prabhat has managed to achieve significant milestones across his professional journey . Before NAFA , Prabhat has worked with Infinity Fincorp Solutions , Induslnd Bank , Bajaj Finserv and L & T Finance . He has also served strategic senior management positions with YES Bank and Axis Bank .
AgriTech
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