Indian bank to use satellite data as tool for evaluating agricultural loans
NEW DELHI, NNA - Indian lender ICICI Bank Ltd. will use satellite data to learn the credit profiles of rural customers who are seeking loans, an apparent first for the country’s finance sector.
The bank announced the satellite data effort on Tuesday to help distribute loans to farmers and by studying key factors such as irrigation and crop patterns, ICICI said in a statement on Tuesday. It said the satellite data can effectively forecast farmers’ future revenues.
“The bank is the first in India and among few globally to use satellite data to measure an array of parameters related to the land and use it in combination with demographic and financial parameters to make expeditious lending decisions for farmers,” the bank said in a statement.
Satellite data will replace the more laborious in-person visits that bank personnel normally make to assess a farmer’s creditworthiness.
“Credit assessments are being done within a few days as against the industry practice of up to 15 days,” the bank statement says. The bank has run a satellite data pilot project in more than 500 villages to make loans during India’s COVID-19 pandemic-induced lockdowns, the statement says.
Use of satellite data dovetails with stay-at-home orders, as the technology requires no human interaction.
“With an encouraging response to our pilot project, we will shortly cover over 63,000 villages in the country for lending with this technology,” bank executive director Anup Bagchi said in the statement.
To make the process work, ICICI is working with agri-fintech companies that specialize in space technology and weather information for commercial usage. The private lender’s rural loan portfolio during the quarter ended June 30 stood at 571 billion rupees ($7.6 billion).