Page 30 - Banking Finance December 2020

ARTICLE

Y FPOs are mostly represented by SF/MF with poor Y The awareness should start at state level and district
resource base and hence, initially they are not financially level forums such as State Level Bankers Committee
strong enough to deliver vibrant products and services (SLBC) and District Consultative Committee (DCC)
to their members and build confidence. meetings held by banks. Applications from FPOs to the
banks could be reviewed at these meetings to assess
Y Farmers' Organizations are required to be efficiently
progress in implementation.
managed by experienced, trained and professionally
qualified person However; such trained manpower is Y Interest subvention for crop loan model can be
presently not available in the rural space to manage extended to FPOs Since they are owned by small and
FPO business professionally. marginal farmers.
Y The need for ratings of FPOs on the lines of SHG rating
Benefits would improve credit worthiness of the FPOs.
Y Cost of production can be reduced by procuring all Y Financing to FPOs should be given top priority for the
necessary inputs in bulk at wholesale rates.
bank.
Y Post-harvest losses can be minimized through value
addition and efficient management of value chain. Conclusion
Y Improved bargaining power and social capital building. In present scenario Farmer Producer Organizations (FPOs)
Y Aggregation of produce and bulk transport reduces has been considered as one of the way to overcome the
marketing cost, thus, enhancing net income of the challenges faced by the small and marginal farmers. This
producer. approach is to be more successful in breaking farmers'
dependency on intermediaries, and enabling them access
Y Easy in communication for dissemination of information better markets (inputs and output), financial services, Input
about price, volume and other farming related supply services, Market services, Technical and networking
advisories.
services which is provided by FPOs to their members.
Financial institutions have Potential Avenue for financing to
Strategies to Finance FPOs
FPOs and increase their priority sector advance portfolio with
The important factor considering increasing minimal default risk.
finance to FPOs is as under:
Y Providing comprehensive early stage funding. Reference
Y Designing appropriate loan products as at the level of 1. Anika Trebbin and Markus Hassler.2012. Farmers'
farmer member and at the FPO level. producer companies in India: a new concept for
Y Encouraging value chain financing under priority sector collective action? "Environment and Planning A". 44 (2),
lending. 411 - 427.

Y Ware house receipts based lending and price risk 2. CIKS & FWWB. Case Study on Farmers Producers
mitigation. Company.2017. Pp 2-4.
3. Government of India (2013). Policy and Process
Suggestion to improve finance to FPOs Guidelines for Farmer Producer Organisations. New
Y It will be necessary to take up advocacy not only with Delhi: Department of Agriculture and Cooperation,
different government agencies but also with banks and Ministry of Agriculture. Pp 16-32.
other financial institutions. SFAC and NABARD are 4. Jayashree Bhosale.2018. NABARD to promote 5000
already engaged and taking the lead particularly in farmer producer organisations in next 2 years. ET
working with the State Governments but the work with Bureau.
the banking sector needs momentum and hence.
5. National Paper - PLP 2019-20. Farmer Producers'
Y Despite RBI's directive to banks on financing of FPOs. Organizations (FPOs): Status, Issues & Suggested Policy

Y Many branches of banks are unaware of the policies Reforms. Pp 1 -10.
regarding FPOs and they need to be educated. 6. www.sfacindia.com. T

30 | 2020 | DECEMBER | BANKING FINANCE