Agri Lending Risk Management
BrainMatics enables Financial Institutions to quantify their credit risk exposures to agricultural loans. Using state of the art satellite image processing techniques BrainMatics can assess yield and price risk across varying crops, regions and seasons with an accurate forecasting module for enhanced risk management and asset allocation.
Framework
- The framework encompasses the entire business cycle
- Defining Business Strategy and product design
- Credit Policy
- Performance Monitoring
- Creating farmer incentives – reward the farmer with better terms if he is willing to grow the right crop suited to the weather, soil etc.
- BrainMatics is also discussing the above with the Planning Commission Govt. Of India to institutionalize Agricultural Credit to the rural population.
- BrainMatics also has a pathbreaking proprietary framework called RiskVeda® for analysing methodology for Agricultural Business and Risk Analysis in typical emerging economies like India.
Main Components
- Crop yield forecasting model for each pre defined region where regions are defined on the basis of weather, soil & crop patterns
- This data is captured at the grid level (50KM by 50KM grid) by the IRS satellite. The data required to forecast the crop yield can be extracted from the archive of satellite images which is readily available.
- Grid need to be mapped to reduce the scale of the exercise and cluster of grids are defined on the basis of similarity measures across various parameters.
- For each of these cluster various crop yield forecasting models are created.
- Commodity price forecasting
- Apart from demand & supply factors other factors like availability of the warehouse where crops could be stored (regional in nature), storage loss ratio are taken into account
- The market structure is analyzed and other govt initiatives which affects the price realization for the farmer is to be taken into account.