Rabo Partnerships Boosts Avanti for Financial Inclusion
India’s rapid population growth is putting pressure on their food security. Smallholder farmers (SHFs) play an increasingly important role in feeding the growing population and shaping the future of agriculture in India. Out of the 139 million rural landholdings in India, 120 million are SHFs with plots smaller than two hectares. SHFs contribute 51% of the agricultural output and primarily rely on informal credit sources. With access to finance, proper inputs, and knowledge, SHFs can boost their agricultural output by 20-30%, enhancing food security and resilience. To provide access to finance, Rabo Partnerships is working together with Bengaluru-based Avanti Finance, a technology-led NBFC (Non-Banking Financial Company) focused on financial inclusion. Avanti’s mission is to provide frictionless, affordable and hyperlocal credit products to smallholder farmers in India, enabling them to build sustainable livelihoods.
Agriculture is a major source of livelihood in India, yet the financial needs of this sector are largely unmet. This gap is particularly evident for SHFs. Due to the physical absence of banks in rural regions, a low-risk appetite for agricultural financing, and a reluctance to provide customized financial products, SHFs often turn to the informal finance sector. To effectively serve SHFs, new business models are required to address agricultural risks, reduce borrowing costs, and adapt to local community needs.
Avanti Finance directly addresses this need by offering data-driven financial solutions to SHFs through local cooperatives, financial service providers and agricultural SMEs. Established in 2016, Avanti has built a digital platform that facilitates a paperless, presence-less, and cashless approach to lending that will reduce costs and friction for un- and underserved segments in rural India. Their unique partnership approach of working with organizations with strong presence in local communities, ensures that the local context and needs are understood and incorporated and cash flow based loan products are offered. These local partners use Avanti’s agile technology and balance sheet to deliver financial products, bridging the last mile to the customer.
Avanti has developed a deep-tech technology suite that enables hyper-localisation of livelihood-related loans with tailored flexibility in terms of setting tenures, moratoriums, interest rates, repayment schedules, and more. A fully digital Know-Your-Customer process facilitates rapid onsite onboarding and customer validation to make the user-process frictionless. In addition, the front-end allows partners, under certain operating parameters, to design a product customised to fit the needs of the customer. Avanti has established a strong proof of concept in 26 states, covering 450 districts and is serving customers in more than 20,000 villages.
"A large part of India’s working population is engaged in agriculture and agriculture-allied activities with over 80% being smallholder farmers. Financial inclusion at population scale can only be achieved if the needs of this currently un/underserved segment are catered to in a more robust manner with support from the government and through private sector initiatives. Avanti is focused on making a difference through an innovative model that combines the power of technology, community reach and quality capital to offer loan products that have a sustainable economic impact. We deeply appreciate Rabo Partnerships support in our mission and need many more impact organizations to partner in this journey." - Rahul Gupta, CEO Avanti
In April 2023, Rabo Partnerships invested in Avanti to support its mission to foster financial inclusion, by increasing smallholder farmers’ access to affordable and hyperlocal credit products. Rabo Partnerships is committed to accelerating Avanti’s business model and amplifying its impact through cooperating on data & credit analytics, enabling Avanti to provide added value services to its partners, as well as that it will enhance its capabilities to accelerate growth of the customer base it intends to serve. This investment supports Rabo Partnerships’ strategy of fostering data-driven financial solutions through local cooperatives and service providers.
Avanti’s commitment to advancing financial inclusion is clearly demonstrated, with 90% of its clients being women, 29% having no prior formal credit history and another 25% being thin file customers. Since 2018, Avanti has successfully reached over 800,000 households, 350,000 smallholder farmers and has an agriculture loan book exposure share of around 50% of its total Assets Under Management of approximately USD 200 million. Avanti’s dedication to supporting SHFs and rural communities is further evidenced by the fact that 77.2% of loans were disbursed to smallholder farmers in the first half of 2024.
India’s large farming population, advanced digital infrastructure, and rich ICT talent make it an ideal market for testing and scaling innovative food transition solutions and fostering a more inclusive society. Looking to the future, Avanti’s scalable operating model and technology stack may have the potential to be deployed in other countries where SHFs remain underserved.