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The State Bank of India, India’s largest bank, is also the largest lender in the agricultural and rural sectors. SBI is leveraging the Agrifin Tech ecosystem to change the payment and renewal methods for agricultural loans via the YONOKrishi platform. Challa Sreenivasulu Setty, managing director of SBI, said farmers can now renew their Kisan credit card (KCC) loans with just four clicks on the app.
Business line Initiatives and future plans when banks are targeting a business of 30,000 rupees, catching up with SBI’s first MD, Setty, who has extensive experience in corporate credit and international banking and has a formal degree in agriculture. From the current Agricultural Sector from the current 215,000 rupees to 2012. excerpt:
What is the current rating of the agricultural sector?
Performance was good across the crop. Demand from both agricultural and rural areas was strong in 20-21. The first wave had little impact on rural areas. So production and local consumption were good stories. The second wave had some impact on rural areas. According to preliminary estimates, the number of GVAs in FY2009 is expected to increase by 3.6%, and is expected to increase to 3.5-4% in FY2010. Infections increased in the first quarter of 2010, but local demand has recovered from June to July. Due to the good monsoon and the proper distribution of rainfall, it is expected that rural areas will continue to perform well this year.
So how is this reflected in credit offtakes?
The largest credit demand is KCC loans, which are not seen from a growth perspective, but are measured from a spending perspective. Most crop loans are paid during the harvest season and then withdrawn again, which is how the cycle works.
In the first quarter, the sale price hit accounts in many northern states, such as Punjab and Haryana. Most of the proceeds of the sale came through e-NAM, FCI, and state agencies and are currently hitting crop loans directly. As a result, first-quarter crop loan growth slowed slightly. Nevertheless, the pickup took place in July. From April to July, we almost executed a crop loan worth 35,000 chlores. So it reflects that the agricultural sector is doing well and spending is going very well.
What is your strategy to boost local credit?
It currently has a portfolio of Rs 21,000 and provides funding for the entire value chain, including related activities such as seed production, seed processing, crop loans, dairy products and fisheries, warehousing and post-harvest financing. We are also the largest lender to self-help groups (SHGs), which also contributes to subsidies in rural or non-agricultural sectors.
By moving the renewal process to the YONO Clichy Platform, we have begun technical intervention in crop loans. The spread of smartphones in the countryside of India is important. With just four clicks, farmers can renew their crop loans annually without having to go to a branch office. The update process via the app eases the burden on my people and also benefits the farmers.
We are also focusing on expanding investment credit. Today, most farm credit revolves around production credit, essentially crop loans. Investment credit will be our extreme focus this fiscal year. We focus on financing agricultural infrastructure-it could be small-scale irrigation, farm gate infrastructure, farmer-owned warehouses, mechanization, and more. The government has also devised the Agri Infra Fund (AIF) of Rs 10,000 under the Aatmanirbhar scheme. So far, it has approved a loan worth Rs 35 billion under AIF. Currently, the investment credit is 10,000 chlores and we would like to double that.
There is also great potential for increased funding for SHG. We have announced the Street Shakti scheme to fund individual members of SHG who want to start something on their own. We have done a lot of activities that have the potential to improve our portfolio, but now it is around Rs 21,000. Our plan is to reach Rs 30,000 in agribusiness by 2024.
So what are the initiatives to help you reach the crawl mark of 30,000 rupees?
In addition to leveraging technology to make crop loans available to farmers, we also work with NABARD, NAFED and other organizations to foster and fund the formation of farm producer organizations (FPOs) and farm producer companies. We have established a procurement model. We feel that credit absorption will be much better if the FPCs and FPOs are funded. In addition, there are many agrifintech companies involved in expanding financial support to rural areas and farmers. We will soon announce a partnership with Agrifin Tech in each segment, including crop production, dairy and fisheries.
We are exploring various models to work with FinTech, such as the Business Associate model. FinTech procures applications and pays commissions or business correspondent models. Also, if they are involved in financing, we can pursue a co-lending model. We would like to improve and expand lending through a joint lending model with micro financial institutions and non-banks. There is great growth there. In short, this is a combination of using our own extensive network of 12,000 to 14,000 branches in rural areas, complemented by Agrifin Tech and MFI. The idea is to use all channels to increase involvement in the agricultural sector.
Is SBI the first move in the field for app-based updates?
We were told that we were the first to make app-based KYC reviews available in the banking system. The YONO Krishi platform makes available Mandy and Mitra sections. Mandy basically provides farmers with pricing information and plans to work with commodity exchanges for that purpose. We are also looking for options that provide a market for farmers to sell their produce on the platform. Mitra provides information on aspects such as farm practices and disease management. We talk with several agricultural input companies, board them and inform farmers in the local language. It’s not just about financing, it’s about how we interact with them, identify their needs, and inform them, it’s real.
This app is a kind of one-stop for farmers. Due to the increasing consumption of digital information in rural areas, institutions such as ICAR and IARI can also be used to provide specific information, such as small videos.
YONO Krishi is one of the largest agrigold loan suppliers for us.
There is a perception that access to credits remains a problem for farmers when compared to urban consumers. What do you think about this and how can you change it?
Obviously perception. We have come a long way. It’s a way farms have been credible since the 1960s. Except for certain state-specific issues, debt relief can slightly complicate farm credit. As a result, crop loan renewals are delayed or the default rate increases. There is a perception that the agricultural sector is inherently highly delinquent. Coming from an agricultural background, I’ve always said that a farmer is someone who never goes out of business as long as he owns the farm. We need to simplify the entire process of lending to farmers. Some interesting things are happening. Many state governments recognize the importance of digitizing land records and are moving in that direction. Use digitized land records that combine satellite imagery and cadastral maps to get farm-level information and convey to farmers the message that they will get a crop loan from us as long as they remain the owner of the land. can do.
I have stated to regulators and governments that process friction between banks and farmers needs to be minimized. As a banker, if I knew a person was farming and continued to own land and had access to digital records available on state government and satellite imagery, I should be able to offer him a digital loan. is. Why can’t I offer a pre-approved loan to a farmer when I can offer a pre-approved loan to an urban consumer? Also, some farmers are progressive farmers. Small and limited farmers basically consider input production credits, which are mainly handled by the KCC. However, if there are farmers with slightly higher land ownership who are considering financing tractors and horticulture, we treat them differently.
Most of these farmers have some established credit history. Tell him that for the next three years, if he has the necessary investment credits, he will offer a pre-approved loan. He doesn’t have to go to the bank for a loan. This can only happen if digital records are available. In addition, if the record is valid for a particular farmer to take out a loan, the buyer buying the land must know that the loan exists and process the loan. If the loan note is enabled on the digital record, the amount of unsecured loan can be increased from the current Rs 16,000 to Rs 30,000. We approached the state in this regard. Karnataka has planned to record your fees and give you a higher loan amount, with digital records available.
It’s also a combination of ways we make farm loans. Some state-specific issues often lead to the perception that farmers are not getting the credit they need. In my opinion, all stakeholders, including states, central governments, and banks, need to work together to create a digital ecosystem that will help increase the flow of credit to farmers. For example, by combining KCC reviews with satellite imagery, executives do not have to go to land to see if the farmer is actually growing the crop. This combination is working, and in the next few years there will be tremendous changes in the way farm credit is processed domestically.
When will I see the farm credits pre-approved by SBI?
First, you need to establish a farmer’s credit profile. Interestingly, most satellite images provide information about what farmers have grown over the last three years. Most farmers already use a credit system and have credit or debit cards. We are trying to combine the two. We work with credit bureaus on how to develop a credit scoring system for farmers. Most farmers were unfamiliar with credit, so they would not have had formal credit other than a crop loan. The scoring model will be announced within 6-8 months. In that case, the YONO app can provide a pre-approved loan. He has access to the facility at any time.
Do you see farmers’ income levels rising? Is that reflected in the behavior of the borrower’s SBI?
Since 2000, productivity has increased significantly and the minimum support price has also increased. So it’s hard to judge from the farmer’s behavior as a borrower, but as I said, there are state-specific issues, some debt forgiveness, and so on. If you set it aside, there is a general tendency to take out crop loans at higher limits. There is a significant amount of uptake in farm credit. I personally believe that the combination of MSPs, the combination of productivity gains, and the subsidies provided through Prime Minister Kisan all ensure an increase in the income level of the agricultural community. This is our evaluation. It’s a trip. In most cases, there will be some calamity, some farmers will be hit and it will take time to recover their losses.
Do you have any plans to fund Agri / FinTech start-ups?
There is a PE wing looking for opportunities to fund start-ups and fintech. No specific amount has been assigned to this. If I have a good chance, I will definitely do it. We are always involved with FinTech and other start-ups. Many of these FinTech services are used on the IT platform and even on the YONO platform. We evaluate the availability of these engagements on a fair basis. We accept that idea.
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