This is how FinTech can help farming communities in India

By Puja Sharma

The company’s distinct near-farm gate integrated offering, spanning storage solutions, digital lending, and digital marketplace, works as the ideal platform for small & marginal farmers otherwise deprived of access to financial services.

Arya. ag and MAS Financial Services has tied up to offer Agri finance to small farmers and FPOs. Powered by an exponentially growing layer of visibility and control currently stretching across 425 districts in 21 states, 10,000 warehouses, and $2b of grain, Arya. ag offers the assurance of quality supply to buyers and on-time fair payment for their products and allied services to sellers. It seamlessly embeds finance to maximize value for both sellers and buyers and the platform facilitates over $700m of finance annually

Arya, India’s integrated grain commerce platform, announced a tie-up with leading NBFC, MAS Financial Services Limited to offer Agri-finance to farmers with a specific focus on small farmers and FPOs. The services will be offered by Arya. ag’s lending services arm, Aryadhan Financial Services.

In countries such as China, India, Indonesia, Japan, the Philippines, and Vietnam, population growth and rising demand for higher yields are the primary drivers of the agriculture sector. There has been significant investment in agritech in these countries. In AgriTech, India has recorded the second-highest number of deals after the US. The total deal value in the country grew by 87% year-on-year from $133m in 2018 to $249m in 2019.

The global AgriTech market was valued at $17,442.7m in 2019 and is projected to reach $41,172.5m by 2027; it is expected to grow at a CAGR of 12.1% from 2020 to 2027. With a share of 29.68% in 2019, APAC ranked second in the AgriTech market, and it is expected to register a steady CAGR from 2020 to 2027. The Agri-food businesses in Asia, which account for an estimated $5t market, are undergoing a technological revolution, which is expected to broaden the scope of AgriTech.

With its fifth such tie-up, Arya.ag aims to fasten march as the country’s largest farming community focused fintech player. The alliance will leverage Arya.ag’s digital technologies-led customer interface that enables a seamless and intelligent new-age end-user experience delivered over the FinTech platform. Arya.ag’s distinct near-farm gate integrated offering, spanning storage solutions, digital lending, and digital marketplace, works as the ideal platform for small & marginal farmers otherwise deprived of access to financial services.

Initially, the tie-up will offer digital lending services delivered over its platform, to farmers in Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh. With this tie-up, Arya.ag & MAS Financial Services are aiming to achieve INR 100 crore co-lending portfolio with new-age digital technologies driving this enablement. For borrowers, the eventual benefit is in the form of competitive costs and hassle-free loan processing with technology at the back end taking care of all inter-financier transaction requirements.

On the launch, Chattanathan Devarajan, Co-founder of Arya. ag, said: “We are thoroughly proud and excited about this association with MAS as it creates a huge opportunity to benefit smallholder farmers. Post-harvest agri-financing through WRF has a largely unaddressed market estimated to be close to INR One lakh crore, two-thirds of which is out of the reach of the formal banking sector. Collaboration between banks and integrated Logitech players like Arya.ag paves the way to service consumers deprived of access to financial services.”

The farm produce-as-collateral model has ensured that Arya.ag’s lending services have been NPA-free since inception with an average per borrower ticket size of INR 28 lakhs. Arya’ag is today the largest NBFC in Warehouse Receipt Finance (WRF) uniquely distinguished by its deep outreach to farmers and FPOs.  The technology-led model enables minimizing transaction costs along with lower interest rates for the borrowers while expediting the turnaround time (TAT) for loan disbursements. The company facilitates finance of over USD 700 Mn annually.

The company is also in discussion with various banks for co-lending arrangements as it aims to serve as the biggest fintech platform in the agri-space with a win-win proposition for both recipient farmers and Banks which presently face challenges in reaching out to rural India with limited connectivity.

Kamlesh Gandhi CMD, MAS Financial Services, said: “We believe that well capitalized and managed NBFCs with niche segments can come together to create synergies that can work as a catalyst for financial inclusion. Our tie-up with Arya.ag will help MAS expand to small Agri value chain participants in tier II & III markets and enhance the efficiency of these entities.”