Samunnati is delighted to partner with SBI, India’s largest commercial bank, for a Co-Lending partnership to enhance funding to the Farmer Producer Organization (FPO). Mainstreaming FPOs as an asset class is one of the key objectives of the agreement and an initial amount of INR 100 Crores has been agreed for the program.

Co-lending is slated to increase liquidity, credit penetration, and help fill the credit gap existing in the largely unserved and underserved sectors such as rural dwellers, lower and middle-income groups particularly in tier-3 and tier-4 cities, MSMEs, and farmers. Co-lending is a unique model that can foster financial inclusion as the end users at remote places are able to access finance at affordable rates. Co-lending arrangements allows for banks to easily fulfil sourcing requirements, while NBFCs on the other hand, can access vast resources and capital at a relatively lower cost as risks are shared. Digitally driven ‘fintech’ players (NBFCs) can efficiently bring traditionally credit-deprived communities in rural areas and people with less credit history into the formal financial system.

This synergistic co-lending partnership helps both Samunnati and SBI extend much-needed finance to a large numbers of FPOs in India, which help flow of agricultural credit trickle down to the under-served segments of the farmers, particularly, smallholders. This unique arrangement will enable Samunnati step up its footprint in the FPO lending segment with customized financial solutions that are affordable and easily accessible to the FPOs. SBI, the largest and most trustworthy brand in Indian Banking with its vast resources and wider reach, will be able to channel credit to the farmers by leveraging Samunnati’s significant presence and experience in the FPO segment.

The real shot in the arm came when Reserve Bank of India (RBI) in November 2020, issued guidelines on ‘Co-Lending Model’ between Scheduled Commercial Banks and NBFCs. SBI is one among the frontrunners especially, public sector banks to enter such an arrangement. This non-financial MoU (Memorandum of Understanding) is slated to enhance the recognition of farmers collectives as a potential segment in the Banking sector. Samunnati works with a growing network of 3000+ Farmer Collectives that have a member base of over 6 million farmers with customized solutions and services in the finance, commerce, trading, and advisory aspects.

Mr. Sree Rama Charyulu M, GM, NBFC Alliances, SBI said “We see an immense possibility in this partnership for impacting the agri ecosystem. Focus of Samunnati in creating an impact in FPO space is of extreme relevance & we believe there is significant rural business opportunity hidden within such farmer collectives. SBI would like to create a strong foothold in this space by leveraging on partnership tie ups, on one hand, for customer reach while extending superior finance product designing capabilities of SBI to our partners. This will create synergies at operational level.

SBI’s pan-India presence and deep interest in Financial Inclusion of the smallholder farmers are enablers for helping an FPO avail an array of financial services. The agreement is a key step in the right direction for Samunnati towards its vision of making markets work for smallholder farmers by ensuring availability of adequate, affordable, and timely credit to the FPOs.