Financing methods to increase value for farmers and traders - REMSL

Abstract

Rastriya e-Marketing services was conceived to bring transparency and equity in the farm produce trading by effectively employing online platform. It has come a long way since the time it started, crossing many hurdles. It has now come to a juncture where the primary focus shifts towards making the process that is in place efficient, by making minor tweaks or introducing new methods to the existing platform. It is in this context, that financing poses a challenge both in terms of efficiency and effectiveness of the financial products deployed; and the need for new methods. The project aims at understanding the current financing and payment systems in place over the ReMS platform, and propose design and implementation level solutions to address these identified gaps. It has been realized that there is an opportunity to increase efficiency in the process by bringing on to the platform, the activities of the commission agents, who are also lenders, with mandated money lending licenses. Though, the incentive to the commission agents is less here due to a stipulated interest band, he gets the benefit of low risk and legitimacy in his transactions. Factoring of payments within the folds of the ReMS architecture will help in removing the arbitrariness in the payments made to the farmers in case of immediate cash requirements. Further, the data collected at ReMS, over long term can help in building credit history for farmers who can’t avail credit from banks due to various reasons ranging from tenancy farming, secured loan limit etc., This can help in simplifying the loan process too. The real fruits of this initiative will be realized when more services are integrated on to the platform, like farm mechanization. Above all, it should be remembered that awareness campaigns form the bedrock for the success of any of the initiatives.