Title: Improving the Performance of  Loan Recovery and  Financial  
Inclusion  for Rural Financial Services with eSaguTM 

Authors: P.Krishna Reddy and G.Syamasundar Reddy 

Media Lab Asia Project
International Institute of Information Technology (IIIT-H), 
Hyderabad, India
E-mail: pkreddy@iiit.ac.in

GV Ramaraju
Media Lab Asia, New Delhi
E-mail: ramaraju@medialabasia.in

Conference: "Seminar on Rural eEmpowerment" organized by Regional Training College,
NABARD, Mangalore, India,  October 11-12,2007.

Abstract:  The eSaguTM system is a personalized agro-advisory system. In this system, 
the agricultural expert provides expert advice to  each farm once in a week based on 
the digital photographs. In Andhra Pradesh, the eSaguTM prototype  has been 
implemented for 8000 farms of 16 major crops  in 100 villages since 2004. The 
results indicate that the farmers have realized  considerable monitory benefits 
by reducing the fertilizers and pesticide  sprays,  and getting the additional yield.
It  is also  a scalable and cost-effective system.   In this paper we explain how 
eSaguTM can be used to improve the performance of rural financial services. It 
can be noted that  the Government of India has been successful in pumping the formal 
credit into the rural areas through various institutions such as Scheduled Commercial 
Banks (SCBs), Regional Rural Banks (RRBs), Primary Agricultural Credit Societies 
(PACS) and Micro Finance Institutions (MFIs). However, rural financial institutions  
are suffering from both   loan recovery and financial inclusion problems.  On the 
other side, the farmers are also facing severe crisis  in clearing  debts due 
to several factors including speculative nature of farming and unscientific 
practices. Also, several poor and marginal farmers are yet to be included in the 
loaning process.  In this context,   the eSaguTM system provides opportunity to 
improve  the performance of  rural financial services  regarding loan recovery and 
financial inclusion. The performance of loan recovery can be improved as eSaguTM  
improves the probability of crop success by making  agriculture  a deterministic 
activity and enabling the farmer to get the maximum gain from the given piece of 
land. The eSaguTM system also maintains a weekly record of each farm. This information 
helps in finding the credit requirement, timely  credit lending, post-sanction follow-up 
and recovery.  It also improves  financial inclusion, as the farm records information 
enables to extend  the benefit of  financial services by identifying  poor and 
marginal farmers by estimating  the credit requirement and potential productivity. 

Keywords: eSaguTM, personalized agro-advisory, ICTs for agriculture, ICTs for financial 
services, ICTs for rural development, rural financial services, rural credit, 
crop insurance.