According to the definition of financial inclusion, a significant portion of India’s population at the base of the income pyramid, which is primarily made up of small and marginal farmers, continues to lack access to institutionalised financial services that are affordable, suitable, sustainable, and ethical. Agri-fintech has undeniably shown that it has the potential to bridge that gap by redefining the nature of financial services and products including credit, insurance, integrated payment transactions, etc. To discuss how Agri-fintech is boosting financial inclusion in the county, Srajan Agarwal of Elets Network (ENN) spoke with Debarshi Dutta, Co-Founder and CEO of Ayekart Fintech.
Please tell us about Ayekart?
Ayekart is an integrated supply chain and finance platform which is empowering the traditional business and strengthening the supply chain ecosystem through finance, technology, and services. Ayekart focuses on small producers, entrepreneurs, merchants, and retailers operating in rural, small towns and semi-urban areas, by continuously assessing and resolving their existing as well as upcoming challenges due to the fast-changing business environment in both the physical and digital world.
Being formally registered in December 2020, Ayekart Fintech Ltd. was commercially launched in June 2021 following the successful pilot of our three tech solutions. With this platform, we aim to bring the traditional business on an equitable platform with digitally enabled businesses and e-tailers.
Our business operations commenced with the primary focus on food, agricultural and grocery supply chains with bulk/wholesale and retail business. The bulk business brings together the small aggregators, FPOs and manufacturers, distributors, and exporters whereas the retail business connects the distributors and retailers.
Please brief us about your products and services and what is your USP?
Ayekart is a one-stop solution for traditional businesses and stakeholders in the food and agriculture value chain to access finance, technology, and other services on a single platform. The integrated digital platform predominantly offers three web-based applications namely ‘Ayekart Business’ (B2B) and ‘Ayekart Hisaab’ as digital solutions that help small businesses to digitise their business operations, access and effectively operate in the digital marketplace. Our tech solutions are carving a place for the traditional businesses in the new digital landscape, providing them with an opportunity to be at par with e-tailers and new-age businesses by offering tailored services, easily accessible resources, and a simplified network.
The platform also provides institutionalised credit solutions and access to Supply Chain Finance through our banking and NBFC partners. In addition, through our vast network of FPO, manufacturers, food processors, distributors, associates, partners, and all the stakeholders in the supply chain can grow their businesses in new geographical areas.
For Ayekart, the USP is the ‘approach’ we have adopted to address the challenges of the food and agricultural value chain. Instead of focusing on the siloed or standalone segments value chain, Ayekart offers solutions for strengthening the entire ecosystem without disrupting the traditional supply chain. It can be said that whereas peers are bringing in innovation with disruption, our approach is innovation with collaboration. We work with traditional businesses, instead of disrupting their business, we help and support them to bring their business up the curve and compete with modern days digital business landscape.
The Indian government has identified financial inclusion as the economic progress of the country. In your opinion, how is Agri-fintech boosting financial inclusion in the county?
Going by the definition of financial inclusion, a large segment of India’s population that falls at the base of the income pyramid, which largely includes small and marginal farmers, is still deprived of affordable, suitable, sustainable, and ethical institutionalized financial services. And Agri-fintech has incontrovertibly demonstrated the promising potential to fill that gap with redefined nature of financial services and products like credit, insurance, integrated payment transaction, etc.
Agri-fintech is better equipped with the technology to alleviate the risks associated with agricultural or primary sector lending which normally deters the banks and other formal lending institutions from extending credit. The data captured at different stages of the crop life cycles from purchasing inputs to sowing, storing, and marketing help them better facilitate the lending institutions to underwrite and devise the collection strategy.
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Agri-fintech can support the entire agricultural ecosystem from input sellers to producers/producers collectively to produce buyers with the products best suited to their needs. For example, working capital loan, aggregation financing, and warehouse receipt financing can help producers and producers’ collectives like FPOs to access formal finance, and services like trade finance, import finance or procurement loans can ensure enough liquidity with the produce buyers. Backed up by technology, Agri-fintech can also ensure the proper utilization of financial services thereby promoting actual financial inclusion in the primary sector.
Micro, small, and medium enterprises (MSMEs) are considered the pillars of the Indian economy. How is fintech crucial for the progress of the MSME sector?
Fintech has resolved two prominent issues with the MSMEs, firstly it brought the segment isolated from an institutionalised lending system under the umbrella of formal financial services. And, secondly, the digital lending and tech-driven process, have streamlined the tedious and lengthy process to access formal credit.
According to the 4th MSME census, 93% of units had either no finance or depended upon self-finance making access to formal finance and limited working capital the biggest challenge that MSMEs encounter to stay afloat. And a report by the International Finance Corporation states that India’s formal banking system can meet only less than one-third of the total credit demand of the sector. To address these pain points, Fintech – a powerful amalgamation of finance and technology – presented an effective solution. Technology and data analytics enabled Fintech to understand the nerve of an entire cycle of MSME’s functioning including monetary requirements in different phases of their operations. Such insights paved the way for varied lending forms like short-term lending, invoice-based lending, point of sale-based lending, etc. for MSMEs to avail which are best suited to their requirements.
Fintech has built up an alternate space for MSMEs to access financial services, especially working capital loans that would be a game-changer in the progress of the MSMEs sector.
What is your perspective on fintech as a facilitator of the transition towards sustainable business models?
Fintech is here to stay, and we have seen the magic of fintech in the last decade with its adoption as high as 87 per cent against the global average of 67 per cent and ranking 2nd in the world. Fintech companies can quite easily be attributed as a more accessible, affordable, and sustainable option for institutionalized financial services for the ‘unbanked’ and the ‘underbanked’ commerce segment like MSMEs, Agribusiness, FPOs and traditional businesses. Fintech primarily addresses the financial uncertainties businesses usually juggle despite having access to formal finance let alone the ones depending on informal resources.
Technology disruption brought in by Fintech is not only transforming the existing course of extending traditional financial services but the ways businesses (especially micro and small) used to muddle through to access them. It surely exhibited the potential to revolutionise sustainable finance with frictionless experience to access financial services long expected from the banks. Additionally, the lower cost of services, convenience, and reduced complexities around privacy, security and compliance make it a more attractive option. In short, Fintech has addressed most of the inherent issues in the traditional finance sector. And with the RBI’s ‘Regulatory Sandbox Framework’ fintech companies can create new financial products and services depending upon requirements unique to different businesses and test them with customers in a ‘live’ environment, of course, with certain regulatory safeguards. This will contribute to making businesses more sustainable.
What are your plans?
Shortly, we are planning to expand our geographical presence in 5 more states in addition to deepening our business in the 8 states we are currently operational in. Apart from physical expansion of operations, we are also in process of expanding the organizational portfolio along with getting all geared up to take Ayekart Platform (PaaS) to the global markets.
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