Micro Loans for Farmers

Abstract

As per 2018, agriculture provides employment to more than 50% of the Indian workforce and contributes 17-18% to the country's GDP. Every farmer possesses a requirement of credibility or other services during the time of cultivation. Due to unavailability of bank loans for low-income farmers, they have no other option but to look up to private lenders or micro-finance institutions. The interest rate charged by microfinance institutions consists of various subjective factors which forces MFIs to provide microcredits to farmers at high-interest rates. Relevant to this context, this paper proposes a blockchain-based system which eliminates the need of MFIs. The system handles microloans on a distributed ledger which increases transparency among stakeholders and also enables small/large scale investors to lend microcredits to farmers at interest rate and repayment schedule decided by the farmer. The proposed system facilitates low-cost, secure and real-time payments with the help of smart contracts.