A farmer in Karnataka’s Kalaburgi district received a notice from a bank saying he owed it ₹1,400 over the past 18 months. The outstanding affected his CIBIL (Credit Information Bureau {India} Ltd) score and prevented him from getting loans. He didn’t know what to do until Bengaluru-based V-Life stepped in to help him.

V-Life, an innovative social enterprise focused on enhancing livelihoods in rural and underserved communities across India, made the farmer pay ₹1,200, got a clearance from the bank and submitted a new loan proposal. 

The farmer’s CIBIL score got affected because he misunderstood the government’s moratorium on loans announced during the Covid pandemic. Many farmers thought they have got a waiver and they need not pay for six months. 

N Krishnamurthy, Head, Financial Inclusion, V-Life

N Krishnamurthy, Head, Financial Inclusion, V-Life

Part of CMS

“At V-Life, we got all the details and educated the farmers that their loan tenure has been extended and they need to pay the pending instalments before getting a ‘no objection’ certificate from banks to get other loans,” said N Krishnamurthy, Head, Financial Inclusion, V-Life.

Launched in 2015-16, V-Life is one of the nine non-government organisations within the Catalyst Management Services (CMS) that works with financial institutions, including public sector banks, to help the rural community, particularly farmers, get credit services. “It is like any other normal business correspondent company which just focuses on getting loans for farmers from banks or non-banking financial companies (NBFCs),” said Krishnamurthy. 

V-Life has helped farmers on Kisan credit cards to get ₹20-22 crore in the last couple of years. It has partnered with a non-banking financial credit firm Rang De and facilitated ₹2-2.5 crore loans for livestock and agriculture at zero interest. 

Aiding FPOs too

“After that, we returned to normal terms and began giving loans at low interest. We are doing this across all locations where Vrutti (another NGO entity under Catalyst Management) functions,” he said, adding that V-Life helps farmer producer organisations (FPOs) besides farmers.

The start-up customises products based on community needs — be it the category of loans or interest. “For Kisan credit cards, landless farmers were not included in some of the banks’ programmes. We negotiated with banks and got them included,” V-Life’s financial inclusion head said.

Also, V-Life monitors the end of use of the loan ensuring that the money is used for the purpose it is sought for. “After the loan is disbursed, we go and check if the loans are utilised properly,” he said.

The start-up also does financial and digital literacy trading for FPOs and its members. “We also focus more on the importance of repayments and how they could improve their credit score in case the loan has gone bad. We also help them in identifying the areas where there are certain issues with their credit score,” said Krishnamurthy. 

Value-chain financing

V-Life also gets insurance cover for farmers for the loans they avail of from financial institutions. “It will help the farmer’s family not to be burdened in case of any untoward incident,” he said. 

The start-up is working with Life Insurance Corporation for the insurance and the amount, a small one, is paid by the farmer. “We negotiated and got it at a very low cost. It is a tripartite agreement and the Catalyst Management Service is the master policyholder,” said Krishnamurthy.

V-Life helps in value-chain financing too. “Farmers need money to purchase inputs. FPOs, on the other hand, need to procure from the farmers and pay them immediately before loading. They don’t have cash flow. We step in there and get them a kind of working capital or cash credit limit so that FPOs can procure the produce from farmers,” he said. 

The Catalyst group has incubated about 25 FPOs through its NGO Vrutti in Karnataka, Tamil Nadu, Andhra Pradesh, Maharashtra and Chhattisgarh. 

Expansion plans

“These FPOs have about 25,000 shareholders. We also are working with other community-based organisations that have a huge number of farmer producer companies (FPCs) under them. We have started working with them and are providing them access to finance and market,” he said. 

V-Life is delivering its services in Karnataka, Tamil Nadu, Maharashtra, Kerala, Andhra Pradesh and Chhattisgarh. It plans to soon expand its activities to Telangana, Madhya Pradesh and Gujarat, said Krishnamurthy has said. This fiscal, V-Life aims to distribute ₹30 crore as working capital to FPOs and farmers. “We are on track to achieve this,” he said, adding that so far it has ensured the distribution of ₹44 crore aiding 10,000 families. 

V-Life works with Canara Bank, Axis Bank, Punjab National Bank, State Bank of India, Gramalaya Microfin Foundation, Samunnati, NABKISAN, Sangamitra and Ujjivan Small Finance Bank besides Rang De. 

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