India is a global agriculture powerhouse, whose food security depends on the production of cereal crops. With climate change, and unpredictable weather events, farmers and rural households remain at the receiving end of it all.
Almost one third of India’s families depend on agricultural incomes, thus to protect them the government of India has laid out various schemes to help them financially. In an interview with Geospatial World, Hiren Doshi, General Manager at SatSure discusses the nitty-gritties of agriculture finance and how geospatial technology plays a significant role in this.
What is your vision with SatSure Sage?
Today, India has about 140 million farmers, and still agriculture lending is seen as a burden.
The vision for SatSure Sage is to make the agri lending business for the financial services industry as profitable as any other line of business. What’s happening right now is that most banks are trying to minimize their losses while achieving the PSL targets instead of looking at this as a profitable business.
If we can move the needle in this industry by helping banks as well as farmers, leverage the power of satellite data or alternate data and make this business much more intelligent for both, that would be our aspiration for the long term.
So far, we have touched the lives of about a couple of million farmers since our inception and we aim to grow that number to 20 million in the next 10 years.
How is SatSure leveraging a technology like satellite remote sensing to enable financial inclusion?
Financial inclusion has multiple definitions. The definition used most often by the government is basically to make financial services available to the under-served.
Today, that’s exactly what we are out to solve – enabling financial services and, more specifically, credit availability to farmers who are left out from the formal lending ecosystem.
These underserved Farmers are forced to access credit from unorganized or informal sources at exorbitant rates, which basically eats into their income and livelihood. This is something which we are very passionate to solve.
For any Bank, the mandate given by the Government of India about achieving the priority sector lending (PSL) targets states that a significant portion of credit should go to small and marginal farmers.
Often the lenders find it difficult to meet these PSL targets because of the high risk involved in agriculture credit. Agriculture in India is heavily dependent on monsoons.
The volatility in weather conditions and its impact on production makes it very difficult to assess the farmer’s ability to repay loan merely based on a credit history.
The two criteria that banks use for credit evaluation are the intention to pay and the ability to pay. The intention to pay typically comes from bureau report, which basically analyzes the borrower’s historic repayment behavior for past and current loans. Whereas, the ability to pay is assessed through income generation potential for the borrower.
Unfortunately, a lot of farmers in our country are still first time borrowers. So they don’t have a bureau score at all! In fact, more than a third of farmers in our country are New to credit (NTC) and hence have no credit score.
Without that information, it’s very difficult for the banks to assess risk and credit worthiness of farmers only through self declaration or field visit.
We are trying to change this, by providing them accurate information about the farmer’s income potential for the last three years or six months, which is a very good indicator about not only the income which the farmer is generating, but also additional 22 parameters including crop type, crop yield and how has the farmer performed wrt to the average district performance.
This enables them to assess not only the income but also the consistency of income over the past six seasons. Through our SatSource report, Banks are able to translate this rich information into decision support tool for underwriting.
This also helps Banks drive operational efficiency, reducing time for underwriting loans from weeks into minutes.
How is geospatial technology used by SatSure Sage to enable better credit lending decisions?
Satellite imageries have been around for many decades, and Earth observation (EO) is not a new science. One of the earliest use cases of EO or satellite data has been to analyze agriculture – from production estimates to what crops are being grown, what is the stress condition, what climate impact is expected on the crop performance, etc.
Agricultural land covers a large percentage of our country, and it is physically impossible for any company or even the government to try and get intelligence about the entire agricultural land by deploying manpower on the field.
We help the banks in the entire lending journey right from sourcing, underwriting, monitoring to collections. For Sourcing, we help lenders identify high potential areas or high potential villages they should be sourcing farmers based on strong agriculture performance in the last few years, long-term trend of rainfall and groundwater in those locations so that they understand the risk profile or climate changes impacting those villages.
We also provide various data sets to gauge socio economic prosperity of those villages. This allows banks to then identify villages where they should be expanding their business and also the villages which have seen declining trends where they should exit.
We have seen when Banks have used such a scientific approach to find the right villages to expand their business they have been able to improve their approval rate to 60-70%, thereby reducing their cost of sourcing significantly.
Besides Sourcing, we also help Banks to underwrite Farmers as explained in earlier question and finally we help Banks actively monitor their Agri portfolio through in-season analytics which helps in formulating the right collection strategy.
For a village ranking report, what kind of data did you collect and how did you procure the data?
Most of the datasets we provide are developed using EO satellite data and applying our proprietary AI, ML technology. We also use data sets from public sources to build a complete solution required by Banks in their decision making.
Please tell us a bit about the recent TransUnion development and what it means for SatSure and the partnership outcomes?
TransUnion (TU) CIBIL is a leader when it comes to bureau reports across the country. They have close to 70% market share in the retail lending business, which also includes agriculture lending.
We have launched a joint product with TU CIBIL – the CIBIL Credit & Farm Report (CCFR), where a lender gets access to both the bureau score as well as SatSource farm report together.
The combined report gives lenders access to credit history as well as agriculture and cropping history for the borrower.
TransUnion, which is present in more than 30 countries across five continents, recently took a minority stake in SatSure, which is a testimony and a belief in our solutions and our intent to solve for financial inclusion using technology. HDFC, ICICI Bank and Kotak Mahindra Bank are also our client turned investors.
Climate change has made the weather predictions very uncertain, and farmers are at the receiving end of it. How does this entire process help in equipping them to face the climate related events?
Tackling climate change requires building sustainable and resilient farming practices. And to enable this, access to credit plays an important role for farmers.
Easier access to credit for Farmers and better risk assessment for banks helps building a better and robust lending ecosystem which is very important to tackle climate change through technology.
Additionally, there are two approaches that will benefit the farmers. Agritech startups are bringing innovative methods to support the farmers practicing sustainable agriculture practices.
To enable better monitoring of outcomes from implementing such initiatives, technology providers like SatSure will help in monitoring the outcomes and build better incentive structures for farmers, thereby enabling them to secure higher loan ticket size at a reasonable cost.
What are SatSure’s plans for the future?
SatSure’s subsidiary, KaleidEO, recently tested its payload in a maiden flight. KaleidEO plans to launch a fleet of 4 satellites by 2026 and this test which was done after the edge processing testing in space, makes KaleidEO the first private sector company from India to design and develop a high resolution, optical, multispectral EO payload.
This will help SatSure with its source of satellite data moving further allowing better control on the data supply chain and overall solutions price.
This will help us in launching more innovative product and solutions for the Agri eco-system. One other initiative very close to our hearts is to directly enable Farmers with data about their own Farms that will empower them to secure credit from any lenders of choice.
