Financial inclusion for farmers

By Mr. Kushal Varshney, Manager- IT, Mahyco



Further to my previous blogpost that talked about the need for financial inclusion for agriculture, and the steps taken by the Government to facilitate the same…I spent some more time going through more articles on this intriguing topic.



I learnt that many public private partnerships and enthusiastic interest from the likes of International Finance Corporation and World Bank is expediting the process worldwide. Many papers have been authored on this subject and many presentations have been made as well. Through this blogpost I hope to bring some of the best practices together to showcase how we can innovate in financial inclusion for the farmers…



For the longest time, Indian agriculture has been depended on the usual line of credit for the flow of finances. However, today there is a need to innovate in the financial services available for the farmers to be able to participate effectively. For this, there is an urgent need to improve the quality of data available for analysis. The current data does not provide comprehensive insights about the individuals. Once this gap is bridged, institutions can innovate in providing financial instruments for various agricultural activities in a cost effective manner.



Financial inclusion needs to be carried out with an aim to reduce cash transactions and enable more digital exchange of income. This would also require innovative techniques that are user friendly and time effective. With this, there is an opportunity to improve access to credit through financial cooperatives and microfinance institutions. However, the current scenario needs to be assessed to ensure we do not have another microfinance crisis.



A unique role in this will be played by innovative solutions to educate farmers and their families about financial inclusion. The data gathered as first step will play an important role in incorporating learnings and making the education modules valuable.



Some of the initiatives in this regards- Mobile Money Identifier - MMID (for non-smart mobiles), BHIM (Bharat Interface for Money) launched by GOI, Aadhaar enabled payments, UPI and various payment wallets launched by Banking as well as non banking Companies are leading the way. MMID, the unique seven digit number issued by banks has the potential to allow digital transactions for users who may not have a smart phone, hence involving the huge percentage of rural population in this process. BHIM which was launched in December following the announcement of demonetization, even deployed innovative ways of gaining popularity like awarding those who use the app often.



To further strengthen these activities, we must encourage private intervention as stand alone projects by companies or public private partnerships. In India, this is a huge potential for startups as young innovative minds are finding gaps to bridge.



With the need identified (need for quality data, financial education and private partnerships) the road to financial inclusion will not be easy, but will be achievable. With solutions required for over 440 million people worldwide, the key to this would be innovation and technology. With the new year, we hope that by end of 2017 the world makes progress on this account and together we can achieve 100% financial inclusion by 2020 as envisioned.