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Samunnati, SBI form co-lending partnership for financing FPOs

The partnership will enable Samunnati to scale its outreach to FPOs with customised financial solutions at affordable interest rates, leveraging the vast resources available with SBI
Samunnati, SBI form co-lending partnership for financing FPOs
Samunnati, SBI form co-lending partnership for financing FPOs (Representational image: Shutterstock)

Chennai-based Samunnati, an open agri network, has entered into a co-lending partnership with State Bank of India (SBI), India’s largest public sector bank, for financing farmer producer organisations (FPOs). Both partners have earmarked INR 100 crore for the initial execution of the programme.

The partnership will enable Samunnati to scale its outreach to FPOs with customised financial solutions at affordable interest rates, leveraging the vast resources available with SBI. The partnership will enhance the outreach for SBI channel credit to the under-served segment of smallholder farmers in the agriculture sector, by leveraging Samunnati’s outreach and nuanced understanding of the FPO sector.

SBI and Samunnati have also entered into a non-financial MoU to develop the FPO sector, to mainstream FPO as an asset class and increase awareness of this class of farmer-owned institutions in the banking sector.

Samunnati works with a growing network of over 3000 farmer collectives with a member base of over 6 million farmers with solutions spanning agri finance, agri commerce and advisory services.

Underlining the partnership, Anil Kumar SG, Founder & CEO of Samunnati said, “We are delighted to partner with SBI, the largest and most trustworthy brand in Indian banking. SBI’s pan-India presence and deep interest in the financial inclusion of the small-holder farmers are enablers for helping an FPO avail an array of financial services. Our collective ambition is to make markets work for smallholder farmers by making available adequate, affordable and timely credit to the FPOs.”

In November 2020, the Reserve Bank of India (RBI) issued guidelines on co-lending partnership model between scheduled commercial banks and NBFCs. SBI is one of the first banks to participate in a co-lending programme aimed at mainstreaming FPOs as an asset class.

Agriculture is the primary source of livelihood for 58 per cent of the Indian population and about 60 per cent of India’s land is used for agriculture. Yet, irrespective of this immense agricultural promise, India’s farmer population struggles with access to capital, technical know-how and production efficiency. As a specialised agri value chain enabler, Samunnati strives to bridge these gaps by working with players across the value chain thereby, enabling them to function at a higher equilibrium through timely and customised solutions.

Sree Rama Charyulu M, GM, NBFC Alliances, State Bank of India said, “We see an immense possibility in this partnership for impacting the agri ecosystem. The focus of Samunnati in creating an impact in FPO space is of extreme relevance and we believe there is a 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 the operational level.

Read more: HDFC Bank sets up Rural Banking division to go deeper into rural markets

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