GuarantCo offers partial guarantee to HSBC India for a loan to Arya.ag to provide liquidity to the agricultural sector

  • Date written
  • January, 2025

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided two partial guarantees to HSBC India for an INR 2.5 billion (c. USD 30 million) loan facility extended by HSBC India to Arya.ag India's leading grain commerce platform.

GuarantCo offers partial guarantee to HSBC India for a loan to Arya.ag to provide liquidity to the agricultural sector

The proceeds of the transaction will be used to provide post-harvest liquidity to farmers, farmer producing organisations (FPOs) and small agri-enterprises, to bring them under the formal banking channel, which, in turn will help the farmers to unlock greater value for their crops.

This is GuarantCo’s first transaction in the agricultural sector in India, with a strong focus on financial inclusion and climate resilience. The sector has a significant presence in India, employing c.60% of the market’s workforce and contributing c.20% of its GDP. However, the full economic impact of the agriculture sector is currently unrealised, with over half of farming households financially excluded from formal credit sources.

Arya.ag supports the financial inclusion of farmers by offering farmgate-level storage, instant finance against commodity, and market linkages for seamless commerce. This allows farmers, FPOs and agri-enterprises to avoid distress sales immediately post-harvest when prices are at their lowest, by storing commodities until off-season when prices appreciate to generate up to 30 percent higher returns.

GuarantCo’s Impact team assessed the project as aligning with the UN Sustainable Development Goals: SDG 2 Zero Hunger (Double the productivity and incomes of small-scale food producers) and SDG 15 Life on Land (Protect, restore and promote sustainable use of terrestrial ecosystems, halt and reverse land degradation and halt biodiversity loss).

GuarantCo will provide partial credit guarantees for two separate loan facilities from HSBC India to Arya.ag’s integrated commerce platform Aryatech, and its fintech arm Aryadhan. Arya has also been supported by a Technical Assistance grant from the PIDG Trust.

Nishant Kumar, Managing Director, Asia Investments at GuarantCo and Head of Coverage – Asia at PIDG said:

“We are delighted to join hands with HSBC India for the first time to support Arya in developing the marketplace infrastructure for India’s crucial agricultural sector. Arya is a unique and innovative company that has the power to unlock the potential of underserved farmers by expanding storage, finance and commerce markets, to ultimately increase their revenues.

“The transaction is expected to provide added market transformation value as replication of Arya’s integrated value chain would enhance the resilience of the domestic post-harvest market. GuarantCo, through the Private Infrastructure Development Group, continues to seek out opportunities to increase economic impact and empower lower-income communities to deliver against the UN’s Sustainable Development Goals in alignment with the PIDG 2030 strategy.”

Sonali Shahpurwala, MD and Head- Inclusive Banking Unit, HSBC India, said,

“We are pleased to collaborate with GuarantCo and Arya on this significant transaction that supports the agriculture sector, a primary driver for India’s economy. This loan underscores our commitment to provide financial solutions that empower businesses like Arya to enhance infrastructure, drive sustainable growth and create a lasting impact.”

Anand Chandra, Co-Founder and COO of Arya.ag, said,

“Partnering with GuarantCo and HSBC India expands our ability to connect farmers, FPOs, and agri-enterprises to vital resources while driving trust and transparency through technology. GuarantCo’s support underscores the transformative power of our integrated model that drives secure storage, accessible financing, and transparent market linkages beyond traditional reach shaping a more efficient and inclusive agricultural ecosystem.“

NOTES TO EDITORS

About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. Since 2005, GuarantCo has enabled USD 6.8 billion of total investment and USD 5.7 billion of private sector investment, giving 44.7 million people access to infrastructure and creating around 243,000 jobs. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development www.guarantco.com
To find out more visit: www.guarantco.com

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of pioneering, partnership, safety, inclusivity and urgency.
PIDG offers Technical Assistance for upstream, early-stage activities and concessional capital; its project development arm – which includes InfraCo Africa and InfraCo Asia – invests in early-stage project development and project and corporate equity. PIDG credit solutions include EAIF (the Emerging Africa Infrastructure Fund), one of the first and more successful blended debt fund in low-income markets; GuarantCo, its guarantee arm that provides credit enhancement and local currency solutions to de-risk projects; and a growing portfolio of local credit enhancement facilities, which unlocks domestic institutional capital for infrastructure financing.
Since 2002, PIDG has supported 233 infrastructure projects to financial close, which provided an estimated 228 million people with access to new or improved infrastructure. PIDG is funded by the governments of the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Global Affairs Canada, Germany, and the IFC. pidg.org

About HSBC India

HSBC India offers a full range of banking and financial services through 26 branches across 14 cities. HSBC is one of India’s leading financial services groups, with around 42,000 employees in its banking, investment banking and capital markets, asset management, insurance, software development and global resourcing operations in the country. It is a leading custodian in India. The Bank is at the forefront in arranging deals for Indian companies investing overseas and foreign investments into the country.
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 60 countries and territories. With assets of US$3,099bn at 30 September 2024, HSBC is one of the world’s largest banking and financial services organisations.

About Arya.ag

Arya.ag is India’s largest and only profitable grain commerce platform. It enables freedom of choice for farmers and their organisations to decide ‘when’ and ‘to whom’ they would want to sell their produce post-harvest by offering access to farmgate-level storage, seamless finance and transparent commerce. It eliminates the trust deficit in grain commerce through its exponentially growing layer of visibility and control, currently stretching across 60% of Indian districts, covering over 11,000 agri-warehouses. Arya.ag aggregates and stores USD 3 billion of grain annually while enabling disbursement of over USD 1.5 billion of loans to small-holder farmers, their organisations and other stakeholders. Arya.ag works towards creating equitable value chains in agriculture, assuring inclusive growth and greater transparency.