AU Small Finance Bank explores corporate tie-ups to engage more FPOs
AU Small Finance Bank is planning to raise its stake with the farm sector through lending to farmers' producer organisations (FPOs), which are turning out to be the crucial agriculture linkage for several marquee conglomerates such as Adani Group, ITC and Reliance.
AU is exploring possibilities to work with such corporates which promote FPOs and procure farm produce from them.
The bank has so far supported about 500 early-stage FPOs covering some 1.6 lakh farmers and aims to grow the number about 10 times in the next three years
«We are exploring opportunities across the corporates. There are some smaller organisations which are also working in this segment,» said AU Bank's head of commercial banking, Vivek Tripathi.
«Some of these corporate have procurement arms or have entities working for them. There is a lot of value chain in between,» he said.
The bank already has a tie-up with ITC and extended credit support to 225 ITC-enabled FPOs for business operations and infrastructure development.
«Our partnership with ITC is just to support the early stage FPOs. They needed more support because they are largely dependent on the grants given by the government,» Tripathi said.
The bank has created 275 FPOs on its own in western and central India. It has approved loans to about 500 FPOs totaling Rs 72 crore as of December-end last year. Of this amount, Rs 56 crore has been disbursed, primarily for working capital purposes. The bank's total agriculture loan book stands at Rs 10,350 crore and out of which small and
