What is the role that electronic payment can play in linking farmers and traders with the commodity market
Creating one-India market for commodity trading would require a well-integrated chain of commodity traders, farmers, exporters-importers, investors and hedgers. Developing a robust, safe and secure global payment technology infrastructure is the first step towards connecting everyone to this network. Making financial transactions for buying and selling commodities and financial products pertaining to commodity trading and hedging in a hassle-free, safe and secure manner are the crux of achieving financial inclusion. In India, commodity brokers are concentrated in certain pockets that are commodity trade centres in places like Rajkot and Indore. To be able to convince a farmer sitting in some remote corner of the country to sell his product on an exchange platform that is located in a metropolitan and through a broker who is again located in some other tier-II city, it will be necessary to give him multiple options of receiving and paying his dues in an easy and safe manner without him having to go through the hassles of running around from bank to bank.
In fact, receiving and making payments are the biggest challenges faced by brokers, striving to reach potential customers all across the country. Depending solely on the banking network for transaction of payments between exchanges, brokers and customers and vice-versa is not enough as more than 60% population in rural areas from where farmers come from still do not have formal banking system. Here is where electronic payment channels can play a large role in connecting farmers and commodity producers and traders with exchanges and brokers.
What are the electronic channels that can be leveraged for ensuring financial inclusion in commodity industry
Innovative solutions must be developed that are best suited to the demography of a particular market. Channels could be anything, ranging from mobile phones to internet or even Interactive Voice Response-based (IVR) solutions, as per the need, accessibility and conveni- ence of the customer. For example, in areas with low internet penetration, mobile phones not only can be used as point-of-sale (POS) of various commodity-trading related services by the broker, but also for facilitating payment transfers from customers to brokers, such as brokerage fee payment, meeting margin requirements and settlement obligations. Online solutions can be worked out in more urban areass. Our recent tie-up with VISA and Reliance commodities is an example of such solutions to facilitate payment transaction in the commodity sector.
Explain a bit about your recent tie-ups
It is a first-of-its kind arrangement in India as debit cards were never before used to make online brokerage payment. This tie-up is unique as it gives opportunity to over one million customers of Reliance Commodities to just log onto the website and make online fund transfers without the need for customers to have an internet banking facility.