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Agriculture Finance: SBI Offers Farmers Finance Against Receivables

State Bank of India has launched a loan product for the horticulture sector to help farmers avail finance against receivables. SBI has signed the memorandum of understanding (MoU) with Jain Farm Fresh for its farmers. This scheme will gradually be extended to all horticulture farmers associated with an anchor.

SBI will provide finance to farmers who supply their agricultural products to large food processing companies and are reimbursed during a fixed time. The bank extends funds based on the receivables to finance farmers in the intervening period.

The loan product uses proprietary historical performance data and information from public domain to assess farmer’s eligibility and credit worthiness to sanction the loan, instead of the traditional method of farmers’ assets, land holding and financial history.

Managing director (national banking group) Rajnish Kumar said, "The government is also taking many steps for reviving the farm sector – new crop insurance scheme, promotion of irrigation facilities, Kisan Suvidha app, electronic mandi portal etc.”

The product is aimed at helping farmers to invest in modern agricultural technologies such as mechanisation, and irrigation for higher productivity, and relies on minimal documentation and liquid assets as security.

SBI chief general manager (rural business) KM Trivedi said, “The farmer financing against company’s receivables product is an innovative product. The solution provides quick and easy credit access to farmers, reducing reliance on informal money lending c hannels.”

Farmers will be able to invest in the upcoming cultivation cycle is the main feature of the SBI product. This is part of the SBI plan to strengthen the ‘farm-to-fork’ programme and increase agricultural lending through corporate partnerships.

SBI signed MoUs with NIF Private Limited (Namaste Dairy), PepsiCo India Holdings, Siddhivinayak Agri Processing and Origo Commodities for ecosystem financing in the agri-value chain.