Smallholder farmers in India grow with fintech

Almost 85 percent of India’s agriculturalists are smallholder farmers, and they’re finding their lives increasingly difficult. Their small plots of land are often scattered over a wide area, the soil is becoming depleted, and crops are suffering under more frequent bouts of extreme weather. The country is also known for its poor infrastructure. Yet farmers need to find a way to grow under these conditions. Demand for their crops is high, but half of the farmers can’t manage to expand their operations because banks would rather not lend to smallholder farmers due to the difficulty in assessing whether they can pay back the loans.

New innovations are giving farmers better access to financial services. One example is the loans platform that Avanti Finance has set up together with fintech company JaiKisan. Avanti built the accessible digital tool and integrated it into various local banks’ systems. Partner JaiKisan arranges a detailed credit score for the farmers, takes out loans from lenders and administers the loans.

Now, farmers who couldn’t get a loan in the past can now easily take out a customized loan from financial service providers. The platform features a very low threshold for use. The farmer can arrange a loan via a simple tool offered in his own language. Everything is digital: the farmer enters his data and the lender uses the credit scoring tool to decide whether to issue a loan. As a result, the loan application can be processed in a very short time. The farmer can also repay the loan digitally, and in the meantime he can maintain control over his own data.

We facilitated loan of 1.2 million euros to Avanti Finance via Rabobank India. Avanti then lent the amount to smallholder farmers sourced by its fintech partner JaiKisan. We also played an important networking role by bringing two of our existing partners together to create an innovative partnership that brings financing closer to smallholder farmers. That is a perfect fit with our goal to use technological developments to improve access to financing and services for smallholder farmers. The platform’s data also makes it easy to measure the impact our loan achieved.