Challenges Faced A lack of access to finance for the region’s farmers has far-reaching consequences. Prices of crops are their its lowest immediately after the harvest season. With high-interest loans taken from informal money lenders, little to zero financial literacy and no proper way to store their crops, farmers are forced to sell their produce for cheap. Unable to earn tidy profits, such trends have ripple effects – affecting factors like the region’s health and education levels. It has also driven hundreds of farmers to migrant labor jobs.
Sakchyam’s Intervention Global IME Bank’s (GIBL) innovative Sakchyam Post Harvest Financing product in partnership with Gyan Agri (KL Dugar Group), is based around introducing the Warehouse Receipt – a receipt that provides proof of ownership of commodities stored in a warehouse, and which can be used as collateral for loans. As the farmers deposit their crops at Gyan Agri’s Warehouse, they will be issued a Warehouse Receipt wsing which GIBL will provide post harvest financing schemes against pledge of farmers’ agricultural products, loan products for particular cash crops and purchase of agricultural inputs and cheap credit from institutional sources to poor farmers. The average size of the loans will be NPR 60,000.
Likely Impact This product will disburse NPR 290 million in loans over the project’s 3-year duration to benefit more than4000 farmers. Farmers will not only sell crops at higher prices but also get credit at lower interest rates compared to informal lenders. At least 50% of the beneficiaries of these loans will be from disadvantaged groups, and 40% of beneficiaries will be women. It will also create new jobs – 40% for women, youth and people from disadvantaged groups and encourage locals to stay away from migrant labor jobs. The success of the product should also be replicated in other districts by the government or by other public-private partnerships. For the bank, this provides opportunities to build new relationships with the unbanked/under-banked rural population and develop new products for them.