Last Updated : 12 July 2011 at 16:20 IST
MUMBAI(Commodity Online): Jain Irrigation and IFC (International Finance Corporation) has joined hands in floating Sustainable Agro-Commercial Finance Limited (SAFAL) that would be engaged in providing financing to farmers in rural India for agri productivity tools such as micro drip irrigation systems and other products.
“It is, perhaps, the first NBFC in the private sector space in India dedicated to extending finance solely to farmers for enhancing productivity and prosperity.” said an IFC spokesperson.
The company would operate through the existing distribution channel of over 2500 Dealers of Jain irrigation Systems Limited to a large extent but would also develop its independent distribution channel.
In India, farm credit flow has registered a quantum jump during 2010-11 with actual disbursements rising 13.74% against the target set for the year. Credit institutions disbursed Rs. 4,26,531 crore during the year against the target of Rs.3,75,000 crore. So how would the scheme really work out as surplus credit is already out there?
“The target based evaluation and conclusion is misleading to arrive at the actual financing need and the “liquidity” in the farm sector. Else other unorganized financers like the money lenders and Aardhias would not flourish.”—the IFC spokesperson said.
“The credit flow to small and marginal farmers in many parts of the country remains limited and restricted mostly for crop loans. The company would focus on relatively small farmers and on financing for agri-productivity tools where it feels there is a need and adequate demand.”, the spokesperson added.
The project is expected to benefit more than 600,000 farmers with limited access to credit, in the next five years and the company has developed its loan eligibility criteria based on experience of the parent company, market study and other market comparables.
“The scheme will be focused on the small farmer having holdings between 1 acre to 5 acres.”, the spokesperson confirmed.
As the financing will support increased usage of micro drip irrigation systems, water harvesting and storage solutions for small farmers are expected to get a boost.
The credit may not be restricted to irrigation purposes alone:
“The company will evaluate the areas and products where financing will be provided based on market needs and demand for e.g. farm mechanization, contract farming etc. It is expected that the company will eventually service various financing needs aimed at enhancing the productivity of Indian farmers.” the spokesperson said.
IFC will hold a minority stake in the company with the majority being held by Jain irrigation systems limited (JISL) including sponsors of JISL and trusts related to the sponsors.
IFC will invest $2.7 million (equivalent to 120 million Indian rupees) in equity in the company.'
As published in: http://www.commodityonline.com/news/Will-India-turn-into-a-cotton-importer-40690-3-1.html
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