Ensuring Timely availability of adequate credit from the institutional finance to rural entrepreneur has been a major
challenge to the planners. Recent initiatives for achieving the objective of"Financial Inclusion" is largely translating
into opening of no frill accounts entailing higher transaction cost both for target beneficiaries and banking institutions.
Any attempt to include the marginalized section without corresponding improvement in the "Purchasing Power" of the target
beneficiaries would be symbolic, self-defeating and non-sustainable.The extremely low credit penetration of 9% by institutional
finance is perhaps an indicator to the obstacle in achieving the objective of effective and meaningful "Financial Inclusion"
of the target beneficiary.The wide gap in timely availability of adequate credit has perhaps compelled the rural entrepreneur,
especially small and marginal farmers to borrow from local money lenders at exorbitant interest rate. The series of tragic news
about farmers committing suicide despite good agricultural year can be partly traced to the lacuna in timely credit,
adequate credit and counseled credit. One of the suggested approaches in increasing the credit penetration for production
purposes thereby improving the purchasing power in the hands of target beneficiaries is by establishing a long term symbiotic
relationship between the financial institution on one hand and the rural entrepreneur on the other. Establishment of Preferred,
"Perpetual Line of Credit" after due process of appraisal
and diligence between the bank and the rural entrepreneur which would end as a "Quasi Capital" on his balance sheet.
The empirical evidence of incremental income generation in the economy and its equitable distribution amongst the population is a great challenge in the backdrop of skewed distribution of income. Unless the predominant section of our economy has significant purchasing power, their inclusion in the financial domain would be symbolic and insignificant. There are historical empirical evidences to suggest that the incidence of poverty, malnutrition, poor hygiene, poor sanitation, illiteracy, risk bearing capacity to face natural calamities, will lead to poor capital formation, even in a good agricultural year due to acute deficiency in purchasing power.
One of the developmental approaches to mitigate the impact of the incidence of above factors is through converging the developmental efforts for improving the purchasing power in the hands of the marginalized entrepreneurs viz., the farming and rural community at large and focusing on production oriented savings economy over consumption-oriented savings-eroding economy approach.
Any financial institution intending to extend its services would be confronted with varying degrees of the above malaise in the rural areas. To surmount these debilitating aspects without jeopardizing its "Risk Capital", a data supported, planning oriented and risk mitigating approach leveraging the latest information technology platform is suggested. The first step to enable effective "Financial Inclusion" could be to significantly improve the purchasing power in the hands of target beneficiaries through scientific assessment of infrastructure availability in the context of project viability and its bankability, thus mitigating the risk for the target beneficiary and the financial institution in the short as well as long run.
Any bank intending to venture in these areas would need a tool that may help the branch managers chart out proper credit plan of rural / semi-urban branches, collect various planning inputs like demographical data, infrastructure and economic environment, analyze the same and draw up a plan for financing various activities holding potential for growth.
D2KTechnologies , a banking technology solution provider having experience of more than a decade in banking solutions comprising of MIS, asset classification and provisioning, Risk Management etc., have developed a suitable software, CRisMac Krishak, which can position itself as a suitable solution for the Bank.
CRisMac Krishak gives an overall scenario of the entire village i.e., demographic data, details of land holding, village credit plan sanctioned by the DCC, details of share croppers, market analysis of the produce for the last four years, etc.
The details of the households along with other assets, details of own lands, lease lands will be entered in the system by the surveyors.
The Farm Production Plan computes the loan/working capital required for raising the crops, maintenance of livestock, post-harvest activities, maintenance of farm machinery and non-farm activities.
The Investment Credit Plan computes the loan required for purchasing agricultural machinery and plantation crops. The Non-Farm Credit Plan calculates the loan required for secondary and tertiary sectors. The aggregate of all these plans will be taken as the eligible loan required by the farmer.
CRisMac Krishak has a functionality of Sensitivity Analysis, Internal Rate of Return computation etc. Besides, the solution helps formulation of credit plans for village, branch, block, district, and region and so on. It has facility to generate LBR returns, PSC returns etc., based on the information collected through the structured data collection screens. On the basis of the data so collected, Bank could decide in which pockets it can increase the credit flow or restrict the credit flow for a particular activity / sector / place.
CRisMacKrishak helps implement the Non-Credit Initiative Plans i.e., Agriculture Extension activities like educating the farmers regarding the use of credit, latest developments on the agricultural machinery, qualitative use of fertilizers and pesticides, community development programs, latest technology for improving the farm output etc., The software also has information on the Government schemes to be implemented, which forms part of the Branch credit plan.