India is the 5th largest economy in the world. India’s economy is basically classified into three sectors — Agriculture, Industry, and Services. States like Punjab, Haryana, Uttar Pradesh, and many more are purely dependent on the agro-economy and livestock is the backbone of the agro-economy.
Here, we will be discussing the challenges which farmers in rural India are facing while opting for livestock loans. On the basis of pain points and challenges rural farmers are facing, we will be purposing a solution to make the process linear and approachable.
Challenges for rural farmers
- Financial literacy and capability — A lack of financial education prevents rural people from using suitable financial products. Financial literacy helps in making sound financial decisions, to select financial products, which best fit their needs, and to know how to use related channels, such as ATMs or mobile banking.
- Lackness of loan plan details — Most of the people in the rural areas are not well aware of types of interest and how installments will be distributed in loan plans. Rural people do not have a medium to compare loan plans that are why usually agents utilize this gap in their favor.
- Unawareness of required documentation — Even if the farmers know about the scheme, there is a problem with getting information about the required documents. Most farmers are not tech-savvy and financial inclusion is still a distant reality in India.
- Corrupt bank officials — There is also a problem of corruption among bank officials. In some instances, farmers’ inquiries are ignored or not considered seriously. Some officials hesitate to grant a loan as farmers don’t have a certain regular income.
- Uncertainty in loan repayments — A livestock loan is a risky business. The unexpected death of cattle due to natural or unnatural disasters during the loan period can lead to irregular repayment or put a stoppage in loan repayment. For banks, this will be a case of NPA (Nonperforming asset) which is a big problem for banks these days.
- Unawareness of Government Livestock Loan Schemes — Currently farmers and the rural Indian population do not have mediums to get information on livestock loan schemes launched by the Indian government and microfinance banks. This is a big gap to fill. Educating the rural populations about government schemes can work as catalysts for livestock loan demands and will help both the farmers and the banks.
- Complicated loan application forms — Below image is an example of a loan application form. A number of fields and near to zero guidance from banks is one of the major reasons the rural population avoids visiting banks for loans.
- Social and cultural challenges: The cyber cafe (or kiosk) model has not worked in many parts of rural India due to socio-cultural issues. One of the reasons for the failure of the kiosk model in rural areas is the lack of usage by women which is largely due to their discomfort in going to kiosks run by men.
Loan schemes don’t reach almost 60 percent of people in rural India, says a new survey that also finds climate change to be the biggest challenge for one in five farmers.
I have also done competitive research by exploring similar types of apps. Below are some of the examples which I have explored.
After going through a number of research papers, surveys, and articles on the challenges people face in rural areas with respect to livestock loan now, the idea is to craft a solution which caters either all of the above issues or should most of them.
As mentioned earlier many of the economy of the Indian state is totally driven by agriculture. Availability of livestock loan to rural population is a real-world problem which needs to be considered. With the accumulative knowledge, I have gathered from research papers, articles, and competitive research, I have created a user flow.
Above visuals consist flow of a user who does not have a verified profile and click on “View Loan Offer” CTA.
Advantages of the digital loan process
- All loan-related information can be accessed from a single source.
- Online submission of a loan application and profile verification will make the loan process hassle-free for farmers. The wait for a bank representative to verify the documents unnecessarily delays the loan process.
- Farmers don’t have to carry and keep loan papers with themselves. Digitalization of the loan process will make their life easy.
- The farmers can access all govt loan schemes through the application. These loan schemes are majorly focused on providing benefits to the farmers.
- Loan repayment and status tracking are a few taps away. There is no need to visit banks or cafes to make a loan repayment.
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