Why we invested in Dvara E-Registry
How is Dvara E-Registry solving the challenge of financial inclusion in Indian agriculture?
Financial inclusion has been a priority of the Indian government for decades, and post-2005 has been a key focus area of the Reserve Bank of India (RBI). Financial inclusion involves ensuring timely access to affordable formal financial services, especially for vulnerable groups. It is a critical step towards social equity and the overall economic development of the underprivileged.
Agriculture employs over 44% of Indian households and comes with a unique set of financial inclusion challenges. Despite being prioritized by the RBI and NABARD for over fifty years, the agriculture credit market is remarkably unsaturated. Only ~30% of farmers avail credit from institutional sources, and 54% of smallholder farmers lack a Kisan Credit Card. The Government of India has set a goal of doubling farmer incomes by 2022, and addressing farm credit will be critical to make that happen.
Why agfintech?
Our latest investment, Dvara E-Registry, aims to tackle the challenge of financial inclusion in the agriculture sector. Founded in 2019, Dvara E-Registry is building a digital platform to improve access to agricultural services, both financial and advisory, for all stakeholders in the agri value chain. Though small and marginal farmers own 86.2% of agricultural land in India, they lack access to formal credit, insurance, and their eligibility for government programs. By harnessing technologies such as GIS and machine learning, the startup aims to achieve the twin goals of empowering underbanked farmers while improving their agricultural productivity.
Dvara E-Registry’s founder is Sanjay Mansabdar, an experienced financial services professional with a deep understanding of startups as an entrepreneur and investor. He holds a B.Tech from IIT Bombay and a postgraduate degree from XLRI Jamshedpur. His interest in social ventures led him to the Dvara Venture Studio Cohort, an in-residence incubator program of Dvara Holdings. During the program, Sanjay became acutely aware of the roadblocks in agricultural finance, and the significant potential for transformation. Smallholder farmers have limited formal financing options, struggle to decode traditional bank products, and usually fail to prove their creditworthiness. From the perspective of banks, there is no procedure in place to proactively find creditworthy farmers to lend to. Moreover, farmers have poor access to scientific crop advisory, quality inputs, and more profitable avenues for selling their produce, all of which ultimately impact their creditworthiness. Founder Sanjay sums it up succinctly, “We cannot go around financing farmers without helping farmers with the business side of things. That’s a tried and tested recipe for disaster!”
What is Dvara E-Registry doing differently?
Every stakeholder in the agri value chain has authentic pain points. To build a reliable, efficient, and transparent system Dvara E-Registry has created two core products, Doordrishti and Khetscore, which are integrated on a common platform. Doordrishti is a mobile app that captures land parcel and cropping area data from remote sensing to ensure land ownership and crop verification. They have also developed Khetscore, which tracks the historical performance of the concerned land parcel, provides a proxy for expected farm cash flow, and assists in credit underwriting of agricultural loans. Together, these products serve three identified pillars of the agri ecosystem:
i) FPO Stack
India has approximately 75,000 Farmer Producer Organizations (FPOs), with membership of 4.3 million farmers. Dvara E-Registry’s platform provide FPOs with yield estimates, credit linkages, and warehousing solutions. FPO members can avail access customized farm advisory, farm analytics reports, and weather updates. Given the digital limitations in rural transactions, all the processes are facilitated by an appointed field representative.
ii) Analytics stack
Currently, land records in India are unreliable and undigitized. The absence of verified documentation to establish the farmer-parcel relationship is often an insurmountable hurdle to access mainstream financing. Using their platform, Dvara E-Registry helps farmers create a report card with verifiable information on landholding details, crop-specific analytics, sowing area details, and FPO membership status. The assessment helps farmers adopt more scientific farming methods while also proving their repayment capacity and financial stability to lenders.
iii) Lending Stack
Farm and farmer assessment, and information on crop-based cashflow, help lenders sanction collateral-free loans to individuals with a convenient, harvest-linked repayment structure. Once a loan is disbursed, and the sowing period complete, the field representative trains farmers to capture and share five images weekly of the field/crops on Doordrishti. These data sets are shared with partner institutions and used to record and monitor real-time crop cycle stages and crop health.
Why we do what we do?
Let us leave you with a story. Narayan lives in a village in rural Odisha. He is a marginal farmer with a tiny land parcel, his only source of livelihood. For years, he unsuccessfully tried to get a loan from his local Primary Agricultural Credit. Therefore, he had to rely on village moneylenders who charged usurious interest rates. Narayan had almost lost hope of getting an institutional loan when the Dvara E-Registry field representative visited his farm. Using the Doordrishti platform, the startup was able to help him procure an institutional loan. Narayan recounts, “I felt as happy as I did when my son was born.”
There are millions like Narayan in India who need institutional loans at reasonable interest rates. It is estimated that an additional 10,000 FPOs will be formed in next 5 years, reaching 15 million farmers. Dvara E-Registry’s one-stop solution can help them achieve a more prosperous future, and contribute to the government’s goal of doubling farmer incomes.
