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ICICI Bank uses space images for farm loans to cut costs


India’s ICICI Bank Ltd has begun using satellite images of farmland to help assess farmers’ credit-worthiness, a move the bank says is helping cut travel costs and make faster lending decisions in a world hit by the COVID-19 pandemic.

The lender, India’s fourth largest by assets, is using pictures taken from space and analysed by a third-party firm, for farm loans in 500 northern Indian villages, with plans to take the technology to 63,000 villages, it said on Tuesday.

Indian banks typically deploy officials to travel hundreds of miles across the hinterland to assess irrigation systems, crop quality and land location for forecasting farm revenue to make loans. Agriculture accounted for nearly 15% of India’s $2.8 trillion economy as of January.

Data from satellite images would help ICICI Bank cut costs and reduce the time taken to give out loans, Executive Director Anup Bagchi told reporters on a conference call.

“It is now taking place in a few days, as against the industry practice of 15 days or more,” Bagchi said. “The biggest upside for us is that there is very little wastage of time on getting the data.”

The technology, which will use more than 40 variables for assessing a farmer’s credit-worthiness, will be applied to a type of farm loan that makes up a third of ICICI’s rural loan portfolio of about 571.8 billion rupees ($7.7 billion), he added.

Indian lenders are currently grappling with more than $100 billion of soured loans, and stress in the agriculture sector has been rising just as the overall share of bad loans is coming down.

Bagchi said satellite imagery – used globally for everything from crop-monitoring and geology to defense and urban planning – could help improve ICICI’s asset quality over the long term.


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