Customized financing for micro-irrigation

Banking Frontiers|May 2020

Customized financing for micro-irrigation
Agri-focused NBFCs need a direct liquidity tap to tide over the demand disruption cycle:
Mehul Dani

Netafim Agricultural Financing Agency (NAFA) operates in a niche area of financing micro irrigations systems and supporting MSMEs in the value chain. Its entire loan book qualifies for priority sector lending (PSL) status. In spite of the challenging times in the last 5 years, the company’s loan book has grown at 33% CAGR to ₹2.75 billion and it has cumulatively disbursed more than ₹ 9.5 billion of loans so far.


NAFA has been working with farmers in water-deficit states like Maharashtra, Karnataka, Chhattisgarh, Madhya Pradesh, Tamil Nadu, Kerala and Gujarat in support of the government’s initiative of increasing the area covered under drip irrigation by about 150,000 acres. Prabhat Chaturvedi, CEO, says the company has directly supported more than 10,000 farmers by providing customized financing solutions for adopting drip irrigation practices. “We have worked closely with 40 sugar mills across Maharashtra and Karnataka to facilitate more than 5000 sugarcane farmers for installing drip irrigation systems – again by providing customized financing solutions,” says he.


NAFA enables the farming community to practice sustainable agriculture and helps to increase farmer income by providing access to timely and adequate finance. Chaturvedi explains that the company operates at the cusp of 3 major concerns faced by Indian farmers - need to develop climate-resilient agriculture despite increasing water-stress, need to increase farmers’ income and need to increase production/productivity of major crops to help in feeding the rising population.


In order to be more effective while serving the farmers, the company has taken a phygital approach. It provides on-ground physical services through 500+ exclusive channel partners of its sister-concern Netafim Irrigation India (NIIPL) in 100+ districts across 8 states. “Our digital touchpoints include a mobile app that was built in-house to service the customers. The field staff carries smartphones while visiting customers and access real-time information pertaining to the respective customers’ accounts. The information is accessible to farmers too through their digital devices,” says Chaturvedi.


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May 2020