Crop Loan: Cibil to help lenders make realistic assessment of crop loans

Banks may consider delinking the farm loans from the borrowers’ credit scores as some sections of the farming community that are facing delays due to natural calamities such as flood are seeing their credit score dented due to delayed payments. Credit bureau Transunion Cibil is working to come up with ratings in such a way that these loans do not reflect in their credit scores.

TransUnion CIBIL, in collaboration with data analytics provider SatSure, has launched the CIBIL Credit and Farm Report (CCFR). This solution will help lenders to improve the flow of credit to the agricultural sector using data oriented and digital credit assessment capabilities. It offers an ecosystem for agricultural financing and policy making besides helping regulators, policy institutions for growth and financial inclusion in the agricultural sector.

“Our report makes contemporary credit insights along with crop production and production risk parameters available, lenders will have a comprehensive view for astute agricultural credit risk management and policy implementation” said Rajesh Kumar, MD and CEO of TransUnion CIBIL.

Non-availability of credible data through a single source that lenders face while extending credit to this sector. Farmers in certain parts of the country have been demanding that agricultural loan be de-linked from their credit score as it is a hindrance to securing formal sector funds to take up projects in agricultural sector. “The nuanced information in the CCFR offers credit institutions a one-stop view of borrowers and furthers the digitization of agri- loans to aid in quick disbursals, lowering appraisal costs, and increasing the user base,” said Prateep Basu, founder and CEO of SatSure.

Data with Transunion Cibil shows that there are 7.4 crore live agricultural loan accounts in the country and lenders have disbursed Rs 7.6 lakh crore to the sector in FY’22.

Public sector banks hold over 70 percent of the agricultural credit portfolio while private banks account for 14 percent and non-bank finance companies another 4 percent hold comparatively very small portion. “Non-availability of credible data through a single source could be a key challenge that these credit institutions may be facing while growing their agricultural lending portfolio” Transunion Cibil said.