The villages act as hub points for tobacco trading. They actually constitute four auction platforms for tobacco under the Northern Light Soil (NLS) category of the agro-climatic zone in Andhra Pradesh. The entire area has more than 6,000 farmers registered with the Tobacco Board, Ministry of Commerce, Government of India. Hundreds of these tobacco farmers can now claim to be ATM-savvy, courtesy ICICI Bank’s Kisan Loan Card scheme. This, then, is their claim to fame…
ICICI’s Eye For Progress
While a majority of companies try to appease the all-important global consumer, ICICI Bank modified its loan offering to cater to one specific user group, in this case, the tobacco cultivators of Andhra Pradesh.
In September 2004, ICICI Bank launched the ‘Kisan Loan Card’ in Devarapalli in association with the Tobacco Board. Along with it, ICICI Bank also inaugurated four India-specific ‘Asan’ ATMs (manufactured by NCR Corporation) in Devarapalli, Koyyalagudem and Jangareddygudem. A pilot project by the bank, it involves the disbursing of cash and crop loans to farmers who are registered with the Tobacco Board.
Brahmananda Hegde, deputy general manager, ICICI Bank, says, “We installed four innovative, low-cost ATMs designed specifically in Andhra Pradesh. This has protected our investment in rural areas, which have lower transaction volumes.”
The Kisan Loan Card
Using the Kisan Loan Card, the tobacco farmers in Andhra Pradesh were able to avail of loans using an electronic card with easy access to withdrawal of cash through ATMs.
Of the 2,200 applicants for the Kisan Loan Card till date, 1,763 farmers who own 2,066 tobacco barns-30 per cent of all barns in the NLS area- are using the loan card.
A bank account that allows ATM use is increasingly becoming a preferred option with users. The tobacco farmers need only have a loan account with ICICI Bank to get ATM access. 
In addition to the cash loan through the card, farmers can also receive crop loans to procure fertilisers, seeds, pesticides, and diesel, among other agricultural supplies. 
The Asan ATMs give farmers 24-hour access to cash withdrawals, and reduce third party involvement
Brahmananda Hegde ,Deputy General Manager, ICICI Bank
Hegde adds, “The Asan ATMs give farmers access to money 24 hours a day through cash withdrawals as against withdrawing from the local brick-and-mortar setups, and reduce third-party involvement. Through Asan, we can extend self-service banking to rural masses sans the huge operational costs, the benefit of which can be given to farmers in the forms of subsidised interest rates.”
Why NCR?
Deepak Chandnani, managing director, NCR India, says, “NCR India spoke to various banks about their needs before beginning their India-specific projects. We carried out a survey of ATM users through the Industrial Design Centre of IIT-Mumbai. Asan is a result of the work done by the NCR R&D teams abroad and in India with IIT-Mumbai.”
As a matter of fact, NCR was named the winner in the Self-Service category of The Banker Technology Awards 2004 (instituted by the UK-based finance publication The Banker) for its EasyPoint 57i machine, the one deployed in Andhra Pradesh as Asan.
Easy Does It!
Asan has a physical appearance and user interface designed to appeal to Indian consumers. A rugged machine, Asan provides convenience shelves-something we would like to see in our urban ATMs.
It supports wireless connectivity through GPRS and CDMA, suitable for areas with inadequate telecommunications. Asan’s enhanced dust filtration mechanism facilitates deployment in non-air-conditioned areas.
Moreover, Asan’s NCR Intelligent Power Management (NIPM) system, comes with an integrated UPS, which ensures the ATM completes an ongoing transaction before shutting down in case of a power failure.
Loan Dilemma No More
S Karthikeyan, manager, Agri business, ICICI Bank, has been associated with the Kisan Loan Card project since its inception, and has interacted with farmers on field. He says, “Earlier, land or other assets had to be mortgaged to procure loans through banks; however, to get the Kisan Loan Card, farmers don’t have to make any mortgage payments at all.
“This eliminates mortgage-related documentation and saves time and effort for both parties. While other banks charge a slab-wise interest rate, ICICI charges a flat rate of seven per cent simple interest per annum, irrespective of the amount of loan.”
Karthikeyan continues, “Five acres of cultivated tobacco equals one barn. Under the Kisan Loan card scheme, the scale of finance is fixed at Rs one lakh per barn of tobacco owned by the farmer. So, even if a farmer has half a barn, he is assured of a loan of Rs 50,000.”
In rural banks, loans are distributed at the discretion of the bank manager, and a specified amount must be withdrawn at one go. In contrast, with the Kisan Loan Card, farmers can withdraw the amount they need periodically through Asan.
Easy Get, Easy Repay
While disbursing of a loan is made easy through Asan, repaying it, too, has been made easier. Farmers repay the loan using the cash flow generated through the sale of cultivated tobacco.
Karthikeyan explains further, “Tobacco being a regulated crop, the final produce can be sold only by auction. For instance, the FCV (Flue Cured Virginia) variety can only be sold by the auctioneer-the Tobacco Board-through an open auction.
“Altogether, one crop of the NLS FCV variety is sold in eight instalments to various buyers including ITC Limited, Godfrey Philips, Transcontinental and other local traders who export most of the tobacco. They pay the Tobacco board, which pays ICICI, which in turn clears part of the debt and remits the remaining amount to the farmer,” adds Karthikeyan.
Promise For The Future
This transparency in operation acts towards building trust and encourages other tobacco farmers to take advantage of the scheme. Whether farmers want to buy a new farm or bore a well-the low cost loans and easy availability of credit suits their needs perfectly.
By leveraging technology, this innovative banking solution of disbursing credit will, in all probability, eliminate any vestiges of the Shylock way of lending money in rural India.