The World Bank's AgriFin program in cooperation with HDFC Bank and Mahindra Finance, hosted a study tour in Jaipur, India on October 11-17, 2015. This was a unique opportunity for participants to learn about innovative agricultural value chain lending practices that banks can use to expand their lending to agriculture.
The Study Tour included an in-depth look at value chain financing models, warehouse receipt programs being used to supply post harvest finance to grain traders, and an opportunity to learn about agricultural equipment finance operations of Mahindra Finance.
Summary of Lessons Learned
Success is possible. Participants agreed that value chain financing is becoming an important and effective way to finance agriculture. They were glad to see that there are practical examples that show it can be done successfully, profitably and sustainably, irrespective of initial challenges. However, it was acknowledged by all and reinforced by HDFC that VCF requires patience; there can be a long gestation period before success is seen.
VCF requires ownership and commitment from all stakeholders. Participants understood the importance of a committed attitude from all stakeholders in the value chain. Whether from leadership in the bank and organizations to cooperatives, a commitment to decentralized operations, acceptance of use of payment systems etc. all play an important role in ensuring success. The quality and dynamics of relationships within the chains are important and need to be nurtured once identified.
Tailor made “solutions” taking into account local realities have made the difference. Much of what the participants registered came back to the tailor made solutions that HDFC and Mahindra have created over time for their customers. The ‘doorstep’ and relationship-based marketing, monitoring and repayment options displayed by Mahindra along with flexible repayment schedules are another example. Learn More>>