Communities in rural Vidarbha face longstanding social and economic problems linked to the vagaries of rainfall, mono-cropping and crop failures, which have compelled farmers to fall prey to exploitative money lenders. They are caught in a vicious cycle of poverty, compounded by major social and health related expenditure. The economic/agricultural distress has led to farmers resorting to suicides, and the region has attracted national attention.

Cash flow to the rural poor is highly seasonal with the major part of income obtained in a few months, while their needs are spread over the year. As a result, there is dependence on informal financial sources to meet needs. They also lack access to formal financial systems to save their earnings or to obtain loans at affordable interest rates. Many fall prey to the moneylenders. The lack of timely and affordable credit also leads to distress selling of crops by farmers.

A solution to tackle these issues and help trapped farmers come out of the vicious cycle was community-based microfinance interventions. To ensure affordable and timely credit to farmers and to break the vicious cycle of dependence on exploitative sources of credit, financial literacy and bridge financing was found to be viable solutions. The introduction of financial literacy initiatives and bridge financing to mitigate farmers’ distress led to the strengthening of Community-based Organisations (CBOs) in around 300 villages spread across 15 clusters in six districts. The strengthened CBOs form the fulcrum of all major interventions carried out under SBI- CAIM such as sustainable agriculture, rainwater harvesting and various marketing enterprises.

Implementing organisations have addressed farmers’ issues through the promotion and strengthening of 2,689 CBOs, consisting of 1,337 Self Help Groups, 1,347 Producers Groups, four Producer Companies (PCs) and one Federation, comprising around 26,898 members. Till date, the institutions have mobilised Rs. 57 million as savings and leveraged credit to the tune of Rs. 95 million.

Having initiated this model, constant efforts are being made towards developing quality groups and financial inclusion of such groups through strengthening CBOs, intensive dialogue, orientation, engagement with banks and bridge financing during agricultural stress. The model has brought down the influence that moneylenders have over poor farmers, a big achievement, thus aiding and bridging the gap between the farmers and the bankers. The interventions have enhanced the farmer’s accessibility and affordability to various financial services in the project villages.

Another major issue for farmers is the marketing of the farm produce. Farmers have inadequate understanding about the market, and despite their labour, middlemen, agri-service providers, dealers, retailers, etc. snatch the major share of the profit, which should have gone into the pockets of the poor farmer. Hence, five PCs have been promoted under the SBI-CAIM programme for the aggregation of the farm produce and to ensure that farmers receive their share of the profits.

The PCs have a membership of around 8,685 farmers across the four districts. The PCs have provided various agricultural services to its members such as timely provision of agri-inputs, pesticides and better prices for produce through trading activities with various market players. The initiatives undertaken under PCs have shown that there is potential to upscale activities and provide larger benefit to producer members. Under the CAIM programme, there are plans to promote 64 PCs in 64 clusters to organise farmers to take the initiative to reduce production cost and realise better market prices for produce.

SBI-CAIM intends to have an elaborate Management Information System set up to monitor outputs, outcomes and impacts of the project. Discussions regarding possible association of CBOs with major financial institutions are ongoing. The goal of SBI CAIM community-based microfinance initiatives goes beyond finance. It is steadily empowering communities to build and show resilience in times of distress in Vidarbha.