Aiming to improve formal credit penetration in the agriculture sector, the Reserve Bank of India (RBI) has mandated banks to allocate 40% of their adjusted net bank credit (ANBC) to Priority Sector Lending (‘PSL’),of which 18% is reserved for agricultural credit. But year after year, banks fall short of these lending targets. The primary reason is that agricultural risk assessment involves field labour, which is expensive and also prone to significant errors in income estimation, making agri credit unviable for most lenders.
Consequently, only 41% of small and marginal farmers were able to access bank credit, while gross non-performing assets in the agriculture sector stood at 9.8%. Growing agricultural credit in a sustainable manner is a massive and complex challenge for banks, NBFCs and the agriculture sector, which contributes almost one-fifth to India’s GDP.
With a deep passion for applying space science & technology to solve real world problems at scale, Prateep Basu, Rashmit Singh Sukhmani, and Abhishek Raju co-founded SatSure in 2017. Prateep and Rashmit were scientists at the Indian Space Research Organisation (ISRO), and Abhishek was part of the founding team of a space-tech startup. In partnership with a few leading banks and financial institutions, SatSure has developed a suite of credit scoring tools that can help lending institutions carry out risk assessments for agri credit using satellite data combined with other information such as historical crop yields and commodity prices.
The incumbent credit evaluation processes for agri credit are largely manual, take several weeks, and incur high operating costs for field investigation, data collection and monitoring. For context, the agri credit target set by the government for FY 2024 is INR 20 trillion. The high cost of underwriting, monitoring and collections combined with high credit losses have been a hindrance to advancing financial inclusion for small and marginal farmers in India. As of March 2022, PSL shortfall deposits which banks keep with NABARD due to their inability to meet their PSL targets had swelled to INR 2.52 trillion.
SatSure’s credit assessment and monitoring tools enable financial institutions to underwrite farmers more reliably and efficiently, thus promising to bring more agricultural households within the fold of formal financial services in a sustainable manner.
SatSure has been at the forefront of product-led disruption of agriculture financial services globally, with innovations built at the intersection of multiple emerging technologies such as commercial satellite imaging, AI, and cloud. We are very excited to have Omidyar Network India as an investor in our journey, as their purpose aligns with our vision of building technology that impacts the lower income communities, enable financial inclusion, and create a truly digital economy.”, said Prateep Basu, Founder and CEO of SatSure.
Why does it matter?
Agriculture is the backbone of the Indian economy. It employs 44% of the country’s working population. As many as 70% of rural households depend on agriculture for their livelihoods and 82% of farmers are classified as small and marginal (farming <5 acres of land) . The agriculture industry faces substantial risks, aggravated further by the increasing frequency and severity of natural disasters, uncertainty in crop yields and market pricing, lack of effective rural infrastructure, and access to assistance programmes.
In the absence of access to affordable credit from financial institutions, farmers are forced to borrow from informal money-lenders who charge high-interest rates, pushing them into a debt trap. Given that the average indebtedness of an agricultural household in India is Rs. 74,121, access to lower cost borrowings from banks is crucial to improving the financial health of farmers.
Business model and team
SatSure’s tools collect and analyse publicly available satellite datasets, combine it with other data points such as commodity prices and crop yields, and provide risk assessment capabilities that can be used by financial institutions.
SatSure’s tools also have large applications in agriculture, insurance and climate related areas in:
1. Responding to risks with advanced warnings and decision insights.
2. Improving field operations with information from satellites, sensors and markets.
3. Monitoring the health of large areas remotely and predicting crop yield accurately.
SatSure’s founding team combines deep expertise in space tech with strong data science and analytics capabilities, as well as deep market insights on the agri economy. Prateep’s career graph spans over a decade of work with different space-related organisations and companies. Rashmit has worked with ISRO and is an expert in analysing data for making business decisions. Abhishek has vast experience across space tech, insurance and research.
SatSure has already established a strong product-market fit in the banking, financial services, and insurance industry. The Company has worked with leading private banks and insurers to develop products using satellite data for underwriting, monitoring and collections in agri loans and rural mortgages as well as claims in crop insurance. It is building new use cases in climate, agriculture, social protection, and infrastructure and also expanding internationally, which will help create levers for sustained growth in the longer term.
Small and marginal farmers represent a large segment of the Next Half Billion that is underserved by the formal financial system. Increasing access to bank credit and insurance is crucial to improving livelihoods for the NHB. The adoption of digital tools leveraging satellite imaging data can go a long way in enabling banks and financial institutions to expand coverage of this segment and to serve them more efficiently and effectively. While some banks, NBFCs and insurers have become early adopters of these tools, we still have a lot of ground to cover. Having laid the foundations by co-creating this product suite with leading financial institutions, SatSure will now work with key partners including credit bureaus, research, and regulatory institutions to accelerate adoption of these tools within the broader banking ecosystem. We believe that SatSure’s credit scoring tools have the potential to democratise agri credit in India over the next decade akin to how credit bureau scores democratised retail credit in India in the past decade. The potential of satellite imaging applications extend far beyond agri credit and insurance and are wide ranging across agriculture, climate change, social protection and infrastructure. For Prateep, Abhishek and Rashmit, even the sky is not the limit!
 Adjusted Net Bank Credit is the net bank credit plus investments made by banks in non-SLR bonds held in the held-to-maturity category or credit equivalent amount of off-balance-sheet exposure, whichever is high.