FinTech in the Agricultural Value Chain – Part 2

Read Part 1 here.

The India FinTech Report 2019 by MEDICI reported that more than 2035 FinTech firms are operating in India, boosted in large parts by foreign and domestic investments, as well as supportive government policies and focused startup accelerators and incubators. The number of startups is growing rapidly, fueled by a large market base, innovation-driven landscape, along with friendly government policies and regulations. In this second part of the article on FinTech in agriculture, we are looking at some of the interesting players at the cross-section of FinTech and agriculture in India.

India’s largest employer is and has always been agriculture. The industry employs more than 50% of the current workforce and contributes ~17% of India’s GDP, and it remains largely unorganized and fragmented. As is the case in most countries, agriculture is a severely underfinanced sector and is also an area with debilitating levels of financial literacy and education. An effective marriage of data science and financial technology innovation can galvanize India’s agricultural credit scenario.

Financial challenges in the agricultural sector

One-fourth of direct agricultural finance to Indian farmers is through either:

  1. Urban/Metro branches of banks
  2. Microfinance companies
  3. From old-world money lenders, for their credit requirements

This prevents the timely disbursement of loans, which further triggers the ballooning of loans in the farming sector. Farmers also need to be equipped to handle crop failures and other natural disasters, foreseen or otherwise. Agricultural sector requires heavy capital ...

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