In rural and semi-urban areas, access to milk production data serves various purposes, the primary being digitisation. It can also bring financial inclusion for underserved dairy farmers.
Kochi-headquartered Federal Bank saw an opportunity in this space, but lacked access to necessary data. That’s when neo-banking start-up Digivriddhi Technologies (DGV) came in, partnering with Federal to facilitate bringing farmers into the banking network and also open cross-selling opportunity for credit and investments. This fruitful partnership has made Federal Bank the winner in the ‘Best in Fintech Initiative’ category in the BT-KPMG Best Banks and NBFCs Survey 2022-23.
The partnership began due to a challenge faced by India’s largest dairy co-operative, Amul. Amul traditionally disburses payments through district-level milk unions, which then distribute cash to farmers weekly. However, two main issues arose: the preference for cash payments and connectivity challenges in remote areas.
That’s when DGV approached Federal in 2021. “We wanted to ensure that the money goes directly into the farmers’ accounts,” explains Jithesh P.V., VP & Head of Fintech Partnerships at Federal Bank.
The partnership operates as follows: DGV creates a platform linking Amul and the milk societies to gather milk deposit data and payment details. It stores the data and records account numbers. “Each society who wants to automate the payments must enroll with the bank and then the bank disburses the payments directly to the account of the farmer, who then can withdraw or transfer the money through Micro ATMs at societies or can make payment digitally using UPI or even withdraw money through debit cards,” explains Jithesh P.V. The farmer account can be with any bank. and need not be only with Federal. However, for farmers not having bank accounts, Federal facilitates account opening via business correspondents (or societies). Farmers can perform banking transaction through Micro ATMs deployed at the milk societies.
There is also the aspect of bovine loans, for which too DGV created a platform, and which can become a vehicle to cross-sell other financial products.
For Federal, the belief is simple: strategic partnerships are always helpful.
@anandadhikari
