Transcript - AgriCorp 2015

PRIORITY SECTOR BUSINESS
An Overview
AgriCorp 2015
4 November 2015
Mumbai
Manoj Rawat
Head, Agribusiness Group
RBL Bank
[email protected]
Priority Sector Philosophy
1.
Credit flow to viable, creditworthy and needy sectors that may
not get timely & adequate credit
2.
Lending directly to beneficiaries, not through routing them
through intermediaries
3.
Consider PSL as normal business operation for banks
4.
Develop innovative structures, products and processes to
address Agri and Rural customers
5.
Addresses key areas- Food security, Financial Inclusion, Growth
and employment.
2
Priority Sector Lending
Breakup
Sl. No.
Segment
Targets
1
Total Priority Sector
40% of Adjusted Net Bank Credit
(ANBC)
2
Total Agriculture
18% of Adjusted Net Bank Credit
(ANBC)
Small & Marginal Farmer
7-8 % of Adjusted Net bank Credit
3
Micro Enterprises
7.5% of ANBC to Micro-Enterprises
Only smaller units with P&M < Rs. 25
Lakh or Services < Rs.10 lakh qualify
4
Advances to weaker
sections
10% of Adjusted Net bank Credit
Priority Sector Lending
Agriculture minimum
18%
Small & Marginal
Farmers 7%- 8%
.
Rural Housing
MSME min 7%
Priority
Sector
.
Social Infra
Renewable Energy
Export credit
Education loan
Priority Sector Lending
Agriculture
Small & Marginal Farm Credit
(7%-8% of ANBC)
Agri & Agri allied activities
MSE
Education
PSL
40 % of
ANBC*
Housing
Export Credit
Renewable
Others
*Adjusted Net Bank Credit
Farm Credit
10-11% of ANBC
Farmers/corporates / partnership
firms/Agroprocessing
18 % of ANBC
FY 15-16 only Agriculture
₹. 8,200,000,000,000
₹. 8,20,000 Crore annual
Credit is the most important &
critical non-land input in Priority
Sector especially Agriculture
GDP versus Credit
% Share of Agriculture to GDP
15.71
14.62
FY09
FY10
14.45
FY11
14.37
FY12
13.95
13.94
FY13
FY14
Bank credit to Agriculture and Allied
Activities (in Cr.)
669,438
338,658
FY09
416,133
FY10
483,466
FY11
546,626
FY12
589,914
FY13
FY14
Agriculture and GDP
 Share of agriculture in GDP is
< 14%
 The sector’s importance in
India’s economic and social
fabric goes well beyond this
indicator.
 The share of agribusiness in
is bound to go up
significantly with the
demand for value addition
continuously increasing
Agriculture only can address the “twin areas of concern”
“Food security” & “Financial Inclusion”
Credit flow to Priority Sector Lending
(Amount in Rs. Lakhs Crore)
Target
Achivement
30
Priority Sector
Lending
25
95%
20
105%
105%
15
107%
99%
10
107%
4.03
5
3.78
12
2005
101%
5.47
5.42
2006
8.22
7.03
7.06
2007
7.34
2008
9.05
10.85
2009
Target
12.77
2010
2011
2012
108%
103%
4
128%
131%
113%
2.55
2.29
1.80
1.25
2.25
1.75
1.05
1.41
119%
118%
3.85
125%
4.68
3.25
3.75
2013
8.34
2014
106%
8.45
6.45
5.11
2.87
2.80
21.68
119%
112%
6
0
18.58
Achievement
8
2
15.78
21.74
16.97
14.97
13.44
11.40
9.65
112%
10
Agriculture Sector
Lending
100%
91%
4.75
5.75
7.00
8.00
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
9
Various Customer Segments being addressed
Socio-economic profile
Large farmers,
horticulturists/
orchard owners
floriculture
Medium & small
farmers with cash
crops and large dairies
Small & marginal
farmers with non
cash crops and
cattle / livestock
owners
Market Approach
Pre Harvest
Land Development
Irrigation Loans
Hig
h
Middle Income
Low income
Crop loan ,- KCC
Farm Equipment
Post Harvest
Agri
Infrastructure
Allied Loan
Commodity Finance
Irrigation facilities
Post harvest transport
Consumption Loans
Investment Loans
Inclusion of 8% Agri Lending guidelines has created strong challenge in distribution of credit
Covering Small & Marginal Serves
multi purposes
- Priority Sector Target
- Weaker Section Target
- Financial Inclusion Target
•
•
6 crore small and marginal farmer is 6 crores
Most vulnerable section of society
Market approach
Farmer Finance
Pre Harvest
Land Development
Irrigation Loans
Farm Equipment
Post Harvest
Agri
Infrastructure
Commodity Finance
Irrigation facilities
Post harvest transport
Consumption Loans
Allied Loan
Investment Loans
11
Capture entire supply chain
AGRI VALUE
CHAIN
RETAIL AGRI
COMMODITY
BUSINESS
CORPORATE
AGRI
12
Segments of Agribusiness
RETAIL AGRI
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Crop Loan
Poultry Loan
Cattle Loan
Allied Activity
Plantation Crops
Land Development
Floriculture
Horticulture
Irrigation facility (Dug
Well, Sprinkler, Drip)
Tractor Loans
Agri Clinics
Agri Business Centres
PACS
Farmers clubs.
CORP AGRI & AGRI
VALUE CHAIN
Retail customers through
corporates
• Dairy
• Sugarcane
• Coffee/Tea
• Fresh produce
• Food processing
Dealers/sellers of
• Fertilizers
• Pesticides
• Seeds
• Feed
• Implements
• Seed Growers
• Other Inputs
COMMODITY &
PLEDGE FINANCE
•
Loan Against Pledge
of commodities
•
Cold Storages
•
Tie-up with
Collateral Managers
•
Tie-ups with Central
Warehousing
Corporation and
State Warehousing
Corporations.
13
14
Key Design Principles
1
Achieve
double
bottom-line
7
Scalable &
viable business
model
2
Complete
product
offerings
Staff with
grass root
knowledge
3
Close proximity &
deep understanding
of customers
6
Technology
as a key
enabler 5
4
Simple &
standardized
processes
Achieve Double Bottom Line
1
Sustained Profits
from Agri
business
2
Socio-economic
growth of our
customers
PSL Targets
KEY OBJECTIVES
• To build a robust agribusiness portfolio which creates value for the farmers,
stakeholders and the bank.
• Create a strong base of agri customer through value added offerings and
customer engagement initiatives
• Capture the banking requirements and cross sell opportunities across the entire
Agri-value chains
• Create sustained revenue stream for the bank
Challenges in distribution of credit
8 % of ANBC
Mandatory Target
•
The number of land holdings in the
marginal and small categories have
swelled by 56 million and 11 million
respectively in last 4 decades
•
The size of the land holdings has
implications for investments in
agriculture, its productivity, farm
mechanization and sustaining farm
incomes itself.
Challenges in distribution of credit
High cost of
credit
delivery
Vagaries of nature
Natural Calamities
Drought
Unseasonal Rains
Hailstorms
Cold Wave
Debt Waiver
Farmer in Distress
Low Productivity
Depleting water Level
Falling commodity Prices
Poor Infra structure
Populist measures
Debt waivers
Vitiates Credit Culture
KEY RISKS
Price Risk
Risk
Elements
Yield Risk
Liquidity
Constraints
Non payment
to Farmer
Diversion
of
Funds
Diversion of
Produce
Other Key Risks:
1. Vagaries of Nature
2. Political Risk
3.
Market Risk
Integrating Value chain Entities
Viz. Dairies, Food processing, Fruit & pulp processing,
Sugar Mills, Irrigation companies etc.
Sells produce to entities
3
Value Chain
Entity
Month 12 - 15
Month 2 - 12
Value chain
entity
Value chain entities provide
technical support &
Constant monitoring of crop
Assist farmers in getting the documentation
for loan, and support in giving inputs for farm
Corporate
Risk Sharing
1
Month 1
Credit Assistance
Repays
the loan installment with interest
2
Value chain
entity
4
Pays the Balance amount
Simple & Efficient Process
TEMPLATE DRIVEN PROCESSES
PROCESS CHECKLIST
FIELD CHECKS
APPRAISAL AND QUALITY CHECK
CONTROLS
/ CHECKS
• Control through Risk and Operations
•System Validations
• End use monitoring
• Alerts for early warning and probable NPAs.
EFFICIENCY
• Straight through processing – One time data entry
• Auto printing of all documents from system
• Online generation of CAMs and appraisal report
QC – Quality Check Process
SG – Solidarity Group Loan
20
CUSTOMER VALUE PROPOSITION
Timely availability
of adequate credit
to the farmers
• Cash flow based assessment - credit absorption & servicing
capacity
• Product to meet both short term and long term demands of
famers
Longer customer
embedment
• Continuous availability of credit crop cycles – 5 years KCC
• Village level meetings to deepen engagement with customers
• Help corporate buyback arrangements
Services offered
keeping holistic
customer’s needs in
mind
• Credit assistance from sowing to marketing /storage
• Credit Shield to mitigate risks
• Consumption loans to meet family requirements
Convenience to
customers
21
• Simplified documentation, Quick turn around Time
• Reaching out to customer at their doorstep
21
Unlocking the Agribusiness Potential
Rural & Agribusiness at the centre of Economy
Agri
Banking
Farm
Equipment
Rural Housing
Payment &
Remittance
Rural Banking Spectrum
Micro Banking
MSME
Rural India Village : 2020
MODEL VILLAGE
With modern amenities
Because it will have
1.
2.
3.
4.
A wi-fi connectivity across all the houses
Best educational facility with school
Concrete roads
Primary & Secondary Health care with advance eye,
dental & maternity care
5. Agriculture production with advanced agriculture
techniques giving high yield
6. Online pricing access and monitoring of crop and
commodity
7. Village level Aggregation and Market centre
8. Agri-based textile & processing industry
9. Its own water filtration plants providing pure water
10. Its own green energy source like wind mills, solar
energy
May 20, 2012: Times of India
A modern day village would look like
To conclude….
1
2
Also achieve
Socio-economic
Sustained
1. Statutory PSL Targets
growth of our
Profits from
2. Regulatory goodwill
customers
Rural business
KEY OBJECTIVES
1. To build a robust agribusiness portfolio which creates value for the farmers, stakeholders
and the bank.
2. Create a strong base of agri customer through value added offerings and customer
engagement initiatives
3. Capture the banking requirements and cross sell opportunities across the entire Agri-value
chains
i
4. Create sustained revenue stream for the bank
20%
Planning
80%
Execution
Thank You
Agriculture only can address the “twin areas of concern”
“Food security” & “Financial Inclusion”
Manoj Rawat,
Head, Agribusiness Group
RBL Bank, Mumbai