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Hassle free loans for farmers

Oct 07, 2010

Micrograam is an online platform to raise credit for farmers from retail investors. Operating from Bangalore, India, it provides hassle free loans at low interest rates to encourage agriculture in rural hinterland.

Bangalore: Farming and the economy are complementary.


“A farmer's work is no child's play. It calls for right decisions at the right time, and wise investments. Even if one fails it leads to disaster,” says Rangan Varadan, CEO, Micrograam, an online, competitive, microfinance marketplace (website: in Bangalore, that enables people to invest in other people at low interest rates and facilitates micro credit to farmers.

“It is six months since we launched our online presence and we are happy to share the tremendous progress that we are making till date,” says Rangan.


“Go to any rural bank in any part of the country and chances are that in many of them you cannot see the manager as he will either be on a long leave (waiting to be transferred) or out for some other work.

“Though the government claims that farmers' loans are being increased and outstanding loans written off, farmers who applied for some crop loan can come out with numerous stories about their futile visits to the bank to meet the ever absent manager.

“In the last five years compare the price of buying a car and essential food items. While you may observe a slight fall in car prices in some cases, the same cannot be said about food commodities, whose prices seem to be hitting the roof. So a farmer who produces these food items wallows in poverty,” he adds. Despite many microfinance initiatives aimed at reducing farmers debt financing for agriculture remains a problem.

Getting a loan of Rs.10,000 from a nationalized bank still remains a dream for many small farmers. For this reason Micrograam chose to look at what role it could play, and intervene to improve agriculture production and improve farmers' lifestyle.

Credit facility

By providing credit through local NGOs, Micrograam introduced flexible financial services to meet the needs of small farmers by extending the grace period before loan repayment starts, extending the period between payments from weekly to fortnightly, monthly or even quarterly, requiring regular payments only of service charges during the first part of the loan period, and offering seasonal loans with lump-sum repayment after harvest.

Micrograam and several NGOs' have joined together to provide training in improved farming techniques, crop diversification and animal husbandry.

“We strongly believe that under this innovative service, farmers will be able to pay off moneylenders and rid themselves of the burden of debt that many of them carried perpetually.

“Better still, they have been able to buy land, make home improvements, vaccinate their poultry, and in some cases, create employment opportunities for others within their villages,” says Rangan.

Availing a loan from MicroGraam is simple and fast, according to Rangan. Given the flexible repayment terms, the farmer does not get burdened with organizing funds or repayment and can concentrate on improving the produce.

How to get loans

MicroGraam extends the credit facilities to both an individual farmer or to a group of farmers. The farmer must be a member of a SHG group that works closely with an NGO in their area. The average time for the borrowers to wait for the loan is about 2-3 months from the time of their application approval process begins.


A loan of Rs 5,000 to Rs 25, 000 is disbursed for seed purchase, fertilizer, organic farming etc and can be repaid after the first six months or after the harvest time, whichever is earlier up till the next six months upto a maximum interest rate of 16 per cent per annum.

MicroGraam screens the applications and if the farmers request is accepted its field partner completes the investment request form and uploads the profile and photo to MicroGraam.

After translation or editing, the profile becomes visible on the marketplace portal. At this point, the potential investors are able to browse the farmer's or farmers' profile and choose to make an investment.

Direct investment

“By supporting a specific farmer or group of farmers, they are directly investing in the livelihood creation,” he adds.

Current areas of operation include Dindigul, Salem, Vaiyampatty, Kancheepuram, Virudhunagar, Madurai, Pudukottai, Trichy in Tamil Nadu and Dharwad, Mysore, Gulbarga, Chitradurga, Koppal, Kolar, Malur, Raichur in Karnataka.

[For more details readers can contact Micrograam at No 42, 7,5th Cross, J P Nagar 3rd Phase, Bangalore-560078,, phone no: 080-65791390]

Source : The Hindu
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