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Agriculture contributes significantly to a country’s GDP Agriculture is an important sector of the global economy. But, there are 828 Million empty plates in 2021. 

Projections suggest that, following a business-as-usual path, SDG 2 on Zero Hunger would not be achieved by 2030 and greenhouse gas (GHG) emissions from agriculture would continue to increase. To achieve the Zero Hunger target while reducing direct GHG by 6%, overall agricultural productivity would need to increase by 28% over the next decade. Comprehensive action to boost agricultural investment and innovation, and to enable technology transfer are urgently required to put the agricultural sector on the necessarily sustainable growth trajectory.

The Government has initiated several policy measures to improve the accessibility of farmers to institutional sources of credit. The emphasis of these policies has been on progressive institutionalization for providing timely and adequate credit support to all farmers. The removal of credit constraints is necessary to improve farmer welfare and support agricultural growth. Agricultural credit policies of successive governments have resulted in burgeoning institutional lending to agriculture over the years. According to NABARD annual report, the total target amount fixed by the Government in FY2020 for the Agri-loan disbursal was 13 Lakh Crore but achieved 13.9 Lakh Crore and in FY2021 the target amount was 15Lakh Core but achieved 15.6Lakh Core.  

So, the particular focus is on small and marginal farmers to enable them to adopt modern technology and improved agricultural practices for increasing agricultural production and productivity. Commercial banks are the key drivers of agriculture credit while cooperative banks and regional rural banks are true players. Moreover, the credit dispensation is skewed in favor of the middle and large farmers- they avail 48% of the total credit despite being 14% of the total farmers’ count. By contrast, the small and marginal farmers who form 86%, disproportionately get 52% of the credit. There are three types of credit facilities available for farmers: 

  • Short-term: Such loans are taken by the farmers to meet their short-term needs for a period of fewer than 15 months and are generally repaid after harvest. 
  • Medium Term: This credit includes farmers’ requirements for a medium period between 15 months to 5 years. Medium-term credits are normally larger than short-term credits.
  • Long Term: These loans are for a long period of more than 5 years and are taken just to buy additional land or for making any permanent improvement on land like the sinking of wells, reclamation of land, horticulture, etc. Thus, long-term credit requires sufficient time for the repayment of such a loan. 

Challenges for Farmers: 

  • Higher loan processing time 
  • Farmers faced many difficulties in repayment of EMI according to the market status
  • Surety and collaterals of farmers have zero impact on banks
  • The high-interest rate for loans charged by the banks 
  • Banks demanded high documentation  

Challenges for Banks: 

  • Poor access and difficulty to reach remote areas
  • Unpredictable policy environment
  • Limited information
  • The perceived high risk of default due to the unpredictable nature of the sector 
  • The adhering exorbitant cost of servicing and acquisition for small and marginal farmers or SMFs

Challenges for Govt.: 

  • Bringing all the farmer households within the banking fold and promoting complete financial inclusion. 
  • Limited Access to or Inaccuracy of Agri-Data 
  • Unpredictable Losses Due to Weather, Pests & Diseases
  • Inefficiency in Underwriting & Monitoring 
  • Fraudulent Paperwork to Get the Loans Approved

To melt worries in the agriculture credit cycle with a unified digital ecosystem, a common, unified credit portal has rolled out a one-stop automated application for farmers and Agri entrepreneurs This is the Common Credit Portal where any farmer can avail of formal sector credit from public sector banks, private sector banks, regional rural banks, cooperative and small finance banks. So, have a look at the benefits below.

Benefits: 

For Farmers: 

  • The easier loan application process
  • Better visibility on the type of loan products offered by banks
  • Ability to prepare quality DPRs (Detail Project Reports) by referring to model DPRs available on the portal
  • Handholding support by the Govt to loan-seeking farmers and Agri- entrepreneurs 

For Banks

  • Access to a large pool of loan seekers
  • Better quality applications because of the provision of model DPRs to farmers
  • Visibility of the status of loan applications from the branch to the headquarter level
  • No need for manually digitizing sanctioned applications into the Core Banking System
  • Access to the independently calculated Agri-credit score of the loan seeker. 

For Government: 

  • Collecting all the farmer data within the banking fold 
  • Less Paperwork 
  • Faster farmer credit loan processing 
  • Proper access to or accuracy of Agri-Data 
  • Visibility of demand and disbursal of formal credit across states ensure better planning of data-driven Schemes 
  • Detection of Fraud documents and loan disbursement 

USP/Features: 

  • Online Application: User-facing web portal and mobile app to apply for and process the loan products offered by 40+ banks in the agriculture and allied sector. Relevant information such as guidelines, and model DPRs for all loan products are available on the platform.
  • Status Tracking: Applicants can track the real-time status of their applications on the portal or the app using their mobile number. They can know at what bank level their application is and who is responsible for processing the next stage of their application.
  • Proactive Status Notification: Applicants also get notifications via SMS and/or E-mail as their application is reverted, sanctioned, or rejected at each stage. They are also informed about any activity that needs to be undertaken at their end.
  • Online Application Processing: End-to-end processing of applications is enabled online on the web portal and mobile app for each bank level.
  • Common Portal: The credit portal is a single portal for accessing all bank loan products available for farmers and agri-preneurs across agriculture and allied services. 
CSM’s Common Credit portal is a one-stop platform enabling ease of the loan application process benefiting both the farmers and banks significantly. It successfully reduces information asymmetry by sending farmers real-time notifications at every stage of their loan application.
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