Making farming sustainable for farmers | ApnaPay

In India, small and marginal farmers face numerous difficulties in their undertaking to engage in agriculture as an income source. Small and marginal farmers have been falling prey to mediators owing to the small quantities that they produce and their socio-economic conditions. The lack of collectivization, small land holdings and informal credit sources structures an endless loop of debt-trap leading to a rise in farmer suicides in the country.

Credit is considered as one of the critical contributor for economic development. Its timely availability in the right quantity and at an affordable cost goes a far in adding and contributing to the prosperity of the general public, especially in the lower rungs of society. Besides physical and human challenges, it is important to input management in agriculture. Along these lines, access to timely credit, especially to the vulnerable section, is an essential aspect for employment, economic growth, poverty reduction and social solidity.

In 1947, the first survey of rural indebtedness (All India Rural Credit Survey) conducted by Reserve Bank of India (RBI) archived that moneylenders and other informal credit providers met more than 90 per cent of rural credit needs. Only one per cent of the total rural households’ debt was provided by banks. This proportion remained low until 1971 when it was 2.4 percent, in spite of the fact that the share of formal sources of credit in rural areas expanded steadily to 29 percent due to the increasing share of cooperatives. After independence, rural co-operative banks were established trying to propagate financial services among marginalized sections of population, with the basic intention of providing more credit to agriculture and small-scaled industries.

The banking industry has shown remarkable growth in volume and complexity during the last few decades. In spite of making significant improvements in all the areas relating to financial viability, profitability and competitiveness, there are alarms that banks have not possessed the capacity to incorporate vast segment of the population. Variety of reasons for financial exclusion includes demand side barriers such as lack of awareness, low incomes/assets, social exclusion, illiteracy, etc. and supply side barriers such as availability of formal credit, distance from branch, branch timings, cumbersome documentation and KYC or eKYC (taking technological advancement into consideration) procedures, unsuitable products, and so on. However, supply side barriers are being addressed to some extent by banks providing doorstep banking to the existing and would-be customers with the help of PoS machine provided to a banking correspondent which enacts as a moving bank branch and micro ATM that facilitate all transactions possible at a regular ATM.

The financially excluded sections to a great extent contains marginal farmers, landless labourers, self-employed and unorganised sector enterprises, urban slum dwellers, migrants, ethnic minorities and socially excluded groups, senior citizens and women. So, the financial sector has the most important role to play the upliftment of the excluded sections and in this way comes the role of Financial Inclusion.

As per the latest Committee on Financial Inclusion, 2010, set up by the Government of India, the Financial Inclusion implies “connecting all individuals, incorporating those living in the remotest of rural areas, to a well-functioning framework. This also includes easy access to bank accounts for safe parking of savings, availability of cheap credit through appropriately

designed loans for poor and low income households and small entrepreneurs and also availability of basic financial products”.

Many successful attempts of financial inclusion are made by Government of India and various institutions to facilitate small and marginal farmers with sustainable and profitable farming and making agriculture viable for the farmers. Two of them are discussed below.


In order to provide an guaranteed income source to the small and marginalised farmers, the Government of India is launching the PM-KISAN (Pradhan Mantri Kisan Samman Nidhi). While presenting the Provisional Budget for 2019-20 in Parliament today, the Union Minister for Finance, Corporate Affairs, Railways & Coal, Piyush Goyal stated, “Under this programme, vulnerable landholding farmer families, having cultivable land up to two hectares, will be provided direct income support at the rate of Rs. 6,000 per year. This income support will be transferred directly into the bank accounts of beneficiary farmers, in three equal instalments of Rs. 2,000 each. This programme will be funded by Government of India. Around 12 crore small and marginal farmer families are expected to benefit from this. This programme will entail an annual expenditure of Rs.75,000 crore”.

PM-KISAN will not only provide guaranteed supplemental income source to the most defenceless farmer families, but will also address their budding needs especially before the harvest season. PM-KISAN would pave the way for the farmers to convert agriculture into a viable business and to earn and live a respectable living.


Centre for Digital Financial Inclusion (CDFI) is join forces with Bihar Agriculture Growth and Reform Initiative (BAGRI) to put into operation their technology innovation KANCHI (Kisan Advancement through Cashless Innovations) that provides a comprehensive solution for FPOs (Farmers Producers Organizations)  to function as business entities and enables small and marginal farmers to get access to formal sources of credit. BAGRI intends to implement Bihar’s Agricultural Road Map for empowering sustainable and inclusive growth prompting to poverty reduction in the state.

CDFI’s KANCHI is a cost effective digital solution that aims to guarantee that agricultural business transactions are directed through banking channels, subsequently maximising cashless transactions with the assistance of PoS machine installed at FPOs to minimise cash transactions by FPOs, to encourage a constructive engagement between financial institutions and farmers, to increase volume of banking transactions and keep accounts active, and to decrease the reliance of the rural farmer population on the informal sources of credit.

Given the cost-effectiveness and holistic design of KANCHI, the technology platform can end up to be a noteworthy breakthrough in solving some of the most pressing issues in collective farming. Thus, it will maximize the benefits for the farmer by converting agriculture from a mere livelihood option to a vibrant business opportunity, fully supporting Government’s vision of promoting financial inclusion and enhanced income for farmers.