Financial Markets

IFC is helping the Andhra Pradesh State Cooperative Bank design and offer new products for small farmers in Andhra Pradesh, expanding banking services to farmers in India’s fourth-largest state.  

With IFC’s support, the state cooperative bank will design new credit and non-credit products, including loans, savings, insurance, remittances and other offerings for farmers in the state of Andhra Pradesh. IFC will assist the bank in developing a system of robust risk management to promote responsible finance and check for over-indebtedness among farmers, leading to stronger business operations. The project will also include training for bank staff and member institutions of the bank.

“It is vital to develop a program that addresses the financing challenges of farmers in an agri-dominant state,” said Kasu Venkata Krishna Reddy, Minister for Cooperation in the state. “This will help us meet the credit needs of the farmers to help accelerate agricultural growth in the country.”

The Andhra Pradesh State Cooperative Bank comprises 4.3 million small and marginal farmers, whom it serves through a network of District Cooperative Central Banks and Primary Agricultural Cooperative Credit Societies. The bank will also develop financial products for women entrepreneurs in the state.

“Credit products offered under the mandated priority sector lending tend to be mostly basic crop loans, which do not meet the full financing needs of farmers,” said Y.Vijayender Reddy, President, Andhra Pradesh State Cooperative Bank. “This project will help us to expand the product and client base substantially, and also strengthen the portfolio quality with better risk assessment.”

According to the National Bank for Agriculture and Rural Development, approximately 50 percent of the farmers in India have limited or no access to formal financial services. Because of the limited availability of credit, agricultural growth has stagnated at around 1 percent annually over the last five years.

Jennifer Isern, who leads IFC’s Access to Finance work in South Asia, said, “IFC will work with the bank to develop flexible financial products along with increased financial awareness, which will help address the agri-finance needs of the farmers while controlling business risks.”

IFC's responsible finance initiative has played an important role in promoting best practices in the microfinance sector in the past year.