State Bank of India has signed a memorandum of understanding (MoU) with Jain Farm Fresh Foods (a subsidiary of Jain Irrigation Systems) to help farmers associated with the latter to get finance against receivables due from the company.
Under the tie-up, India’s largest bank will use the corporate’s ecosystem data to digitally enable lending solutions to customers.
Farmers’ past performance data with the associated anchor company will be used to assess eligibility and enable loan sanction.
This solution, unlike traditional agri-lending products, moves away from lending based on the farmers’ assets, landholding and financial history. Instead, it uses proprietary historical performance data and information from public domain to assess farmers’ eligibility and creditworthiness to sanction the loan.
According to a bank statement, the new product relies on minimal documentation and liquid assets as security and helps reduce the time involved in sanctioning.
A proprietary digital tool has been developed by SBI to facilitate this centralised electronic sanctioning.
Rajnish Kumar, MD - National Banking Group, SBI, said his bank is seeking to harness the combined potential of the rural economy, disruptive digital innovation, and the strength of corporate partnerships.
The product will provide credit to farmers to make investments in modern agricultural technologies such as mechanisation and irrigation resulting in higher productivity and subsequently higher farm income, he added.
K M Trivedi, CGM - Rural Business, SBI, said: “The solution provides quick and easy credit access to farmers, thereby reducing reliance on informal money lending channels.
“With access to capital, farmers will be in a position to invest in the upcoming cultivation cycle resulting in opportunity to earn additional income.”
As on March 2016, SBI had over 10 million rural customers with a loan book of more than ₹1.25-lakh crore.