(How money actually flows to farmers, FPOs & agri-ecosystems)

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1️⃣ Agricultural Credit Products

👉 “What type of loan is given?”

🔹 A. Crop / Production Loans (Short-term)

Purpose

• Seeds, fertilizers, pesticides, labour
• Seasonal working capital

Key characteristics

• Tenure: 6–12 months
• Repayment: After harvest
• Interest often subsidised

Analytics angle

• Yield risk
• Price volatility
• Weather exposure
• Repayment depends on one crop cycle

📌 Most common agri loan in India

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🔹 B. Kisan Credit Line–Type Revolving Credit

Purpose

• Flexible credit for recurring farm needs

Key characteristics

• Revolving limit (like OD/CC)
• Draw–repay multiple times
• Based on landholding & cropping pattern

Analytics angle

• Utilisation pattern
• Repayment discipline
• Cash-flow smoothing

📌 Good dataset for behavioural credit analytics

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🔹 C. Term Loans (Medium / Long Term)

Purpose

• Tractors, irrigation systems, plantations
• Dairy, poultry, farm mechanisation

Key characteristics

• Tenure: 3–7 years
• EMI-based repayment
• Asset-backed

Analytics angle

• Asset productivity
• Long-term income stability
• Default risk increases with climate shocks

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🔹 D. Plantation Crop Loans

Purpose

• Coffee, tea, rubber, cardamom, spices

Key characteristics

• Long gestation period
• Moratorium before repayment
• Highly climate & price sensitive

Analytics angle

• Yield variability
• Price cycles
• Cash-flow gaps

📌 Perfect use case for risk analytics + insurance integration

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🔹 E. Allied Agriculture Loans

Purpose

• Dairy, fisheries, poultry, beekeeping

Key characteristics

• Regular cash inflows
• Shorter cycles than crops

Analytics angle

• Daily/weekly cash flows
• Input price risk
• Disease risk

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🔹 F. FPO / Agri-Enterprise Loans

Purpose

• Aggregation, processing, storage, marketing

Key characteristics

• Balance-sheet driven
• Governance risk
• Member dependency

Analytics angle

• Portfolio risk
• Operational risk
• Working capital cycles

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2️⃣ Agricultural Lending Models

👉 “How does the lender decide & disburse?”

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🔹 1. Collateral-Based Lending

Logic

• Land, equipment, warehouse receipts

Strength

• Lower credit risk for bank

Limitation

• Excludes small & tenant farmers

Analytics focus

• Collateral valuation
• Loan-to-value (LTV)

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🔹 2. Cash-Flow–Based Lending (Emerging & Important)

Logic

• Repayment capacity > asset value

Uses

• Tenant farmers
• Smallholders
• FPO members

Analytics focus

• Crop-wise cash flows
• Stress scenarios
• DSCR

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🔹 3. Group-Based / Joint Liability Lending

Logic

• Social collateral
• Peer monitoring

Used for

• SHGs, JLGs

Analytics focus

• Group default behaviour
• Correlation risk
• Contagion effects

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🔹 4. Value Chain / Contract-Based Lending

Logic

• Linked to buyers, processors, exporters

Example

• Coffee buyer guarantees purchase
• Loan recovered from sale proceeds

Analytics focus

• Counterparty risk
• Price assurance
• Supply chain dependency

📌 Lower default, higher data dependency

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🔹 5. Digital / Alternative Credit Models (Agri-FinTech)

Logic

• Data-driven decisions instead of land records

Data used

• Satellite data
• Transaction history
• Weather & yield proxies

Analytics focus

• Credit scoring
• Model explainability
• Bias & data gaps

📌 Future-ready but risky if misused

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3️⃣ Simple Frame

Credit Product = Why money is borrowed
Lending Model = How risk is assessed & managed

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4️⃣ Quick Mapping

Credit Product	Lending Model	Key Risk
Crop loan	Cash-flow based	Yield & price
Plantation loan	Moratorium-based	Climate
FPO loan	Balance-sheet based	Governance
SHG/JLG	Group-based	Contagion
Contract farming	Value-chain based	Buyer risk

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