INTRODUCTION

The majority of the world’s poor live in rural areas. Yet most lack access to the range of
financial services they need. Financial services available to them are relatively costly or rigid,
whether from formal or informal financial providers or traders and agricultural processors
offering input credit. Financial institutions seeking to work in rural areas face numerous
constraints, such as poor infrastructure and low education levels. Moreover, the main products of
many microfinance institutions—short-term working capital loans with frequent expected
repayments—are not well-suited to seasonal or longer-term agricultural activities.

FEATURE

1. Reduce crop related risks by proving crop covers.

2. Encourage creative and innovative cropping.
3. Better utilisation of resources though education.
4. Technological support through assistance on cropping pattern via satellite imaging.(linking
them to various startups.

STRUCTURE

• The premium paid by the farmers will be in proportion to the land holding and the crop. The
government subsidy will be 30% more than what is paid by the farmers. The proposed interest
rate for the same are 1.5% by the farmers and 2% premium to be paid as government subsidy.

• Guaranteed returns: Regardless of the market fluctuations farmers will get the sum guaranteed,
the priority is to encourage farmers to save for rainy days.

• Capital protection: Farmers will receive the investment and gains when the tenure ends.
MARKETING

Financial services marketing refers to the collective use of marketing tactics employed by
marketers in the financial services sector to attract new customers or retain existing ones.

Build trust with your prospective customers

Trust is a hard thing to build no matter your company size and whether you’re a financial advisor,
loan issuer, or savings product. Whatever your specialty is, making people trust you is the single
most important factor you need to solve for in order to gain new customers.

Price

The government subsidy will be 30% more than what is paid by the farmers

Promotion

All the promotional tools are essential right from the initial stage.

The objective is to make the people aware of new product, to persuade customers, to remind
customers, build image. An advertisement in banking is a promise. Eg: newspapers, radio,
television, magazines & hoardings. Sales promotion: brochures , calendars, diaries, penstand.

Publicity

A customer tends to believe a news item rather than an advertisement.

PLACE

Making the service available & accessible to the customer. Selection of suitable location is
important. Should have sound availability of transportation, communication, electricity & other
necessary facilities for the smooth functioning.

PEOPLE

Financial Services cannot be separated from the person who markets them.

• Banks adopts internal marketing in order to make the whole business customer- oriented.

• The service is known to the employees before they are effectively marked to the customers.
PROCESS

• Accounting procedure for putting through a transaction. Through automation of transactions,

accounting procedures & data handling. Eg: loan application, clearance of cheque.

PHYSICAL EVIDENCE

• Imaginative designs of brochures , flashy cheque books.

• Attractive brand names, logos, symbols.

• Customers perception of service quality.

SUPPLY CHAIN MANAGEMENT

Building a Supply Chain for Rural India is one of the most critical aspects for a developing
nation. Approximately 60% of India’s population is rural & 800 million people is expected to
live in rural India in the 2040-50s making rural supply chains in India the next big opportunity.
Inclusive innovation combining significant improvement in products and processes as well as in
business and service models is needed to transform rural to a confluence of vibrant business
activities.

Population size, density & availability of services including communication, healthcare,

education & finance differentiate between global, rural and urban. MNCs improve upon their
business and set up activity centres only in cities, metros buzzing with their good infrastructure,
transportation & IT facilities and they don’t find it profitable to build up establishments in rural
India. Hence, infrastructure development and inclusive development of rural India is majorly
driven by Government. Hence rural supply chains mainly revolving around agricultural produce,
toys, handicrafts and textiles are not modern day, sophisticated functions and hence needs
revolutionary intervention & holistic improvement for the correct implementation of schemes
like these.

The main objective is to flawlessly design this scheme, efficiently create it & finally deliver it to
customers in the rural areas in an optimum quality faster.
Fig 1. Representation of an Input-Output of a rural supply chain for the above scheme

It is an essential combination of three factors: a logistics networks entrusted with efficient

handling & transfer of funds & information; an IT network & a financial network. The logistics
network ensures streamlined material flow across partners with a key goal of reducing lead time.
The IT network is essentially a secure Extranet which enables communication & integration of
information across the organization which has the potential to offer efficient logistics and more
data driven effective business decision making. Finally the third financial network takes care of
proper communication among the farmers and connect among various stakeholders like
financing, credit rating agencies and insurance agencies.

Value chain Analysis

Value chain finance refers to financial products and services that flow to or through any point in a
value chain that enable investments that increase actors' returns and the growth and
competitiveness of the chain. Whereas financial transactions within a value chain are not new
(production finance could be considered "value chain finance"), several emphases distinguish a
value chain finance approach. These include improving finance at specific points in the value
chain to increase the competitiveness of the entire value chain and involving multiple actors and
leveraging relationships to lower or mitigate risk. Taking a value chain approach entails
considering the risks and returns of the finance supplier along with the risk and returns of the
value chain actor demanding finance. Value chain actors themselves, banks, microfinance
institutions, other non-bank financial institutions, or a combination of these actors can provide or
facilitate financing to a value chain. These actors may participate in a value chain financing
arrangement for different reasons, and these reasons determine the ways in which they are willing
to facilitate financing for a value chain upgrading investment. Often in value chain finance, some
form of strategic alliance is established between the financial provider and one or more value
chain actors to reduce transaction costs and lower risks that otherwise impede access to traditional
financial services. In such arrangements, private sector actors may directly finance a particular
investment or cash flow need, or they may help facilitate financing from a more formal financial
institution. It is important to understand how value chain governance, relations and linkages are
structured to respond to market opportunities, because these factors will determine the viability of
a financing arrangement. Value chain finance works best where there is strong end-market
demand, as well as transparency, trust and strong and repeated inter-firm transactions. The
stronger the relationships, the more readily players in the value chain can rely on their
relationships to facilitate access to finance. The most common ways value chain actors facilitate
financing include:

 Screening Borrowers: Value chain actors may have useful information about potential
borrowers. This information can help financial institutions screen for reliability, evaluate
profitability and/or assess the risk of default.

 Disbursement/Repayment of Loans: Value chain actors may play a direct role in loan
transactions. They may be positioned to disburse loans on behalf of the financial
institution (in-kind or cash) and loan repayments may be channelled through them as well.
These roles can help to lower transaction costs and reduce likelihood of arrears and
default.

 Default Risk/Collateral: Value chain actors may provide a form of "soft" collateral.
Unlike "hard" collateral such as land titles, "soft" collateral can be in the form of direct
(formal or informal) guarantees or co-signing, assigning value to inventory in a
warehouse, etc. Value chain actors may also provide some alternative which is acceptable
to a financial institution in the case that legal collateral is not available to secure the loan.
Purchase orders and buyers' contracts may provide a reasonable guarantee of repayment to
the extent that a financial institution would waive traditional requirements. Even when
buyers' contracts are not transferable (and thus are not truly a substitute for collateral),
they can be important nonetheless to the lender, since they signal creditworthiness and
thus decrease the default risk .