Anubhav Dayal: Pioneering Agricultural Finance through Innovation

Anubhav’s proposal for virtual food grain assets (VFGA) stems from a fundamental issue plaguing farmers worldwide: the challenge of accessing financing to sustain and grow their agricultural operations. Traditional lending avenues often come with high interest rates and stringent collateral requirements, making it difficult for many farmers, especially smallholders, to obtain the funds they need to invest in seeds, equipment, and other essentials. This innovative model not only provided farmers with access to primary capital markets but also facilitated price discovery through the secondary market trading of Virtual Food Grain Assets on exchanges.

Anubhav Dayal proposed virtual food grain assets to address a critical challenge faced by farmers in accessing financing without resorting to traditional loans. His idea is to create a system where farmers can sell virtual representations of their future crop yields on the stock exchange, essentially turning their anticipated harvests into tradable assets. “Here's how it works in simple terms - let's say a farmer expects to grow 100 tons of wheat next season. Instead of waiting to harvest and sell the wheat, the farmer can sell ‘virtual wheat’ certificates/ tokens to investors. Each certificate/token is for 100 kilograms grain. These certificate(s)/token(s) represent a promise to deliver the actual wheat when it is harvested. In return, the farmer gets immediate cash, which can be used to buy seeds, equipment, or cover other expenses.

Investors, on the other hand, buy these virtual wheat certificates/token as an investment that they can trade i.e., sell on the exchange and book profit and repurchase, an activity that can continue till the respective VFGA’s maturity date. They hope that when the harvest comes, the price of wheat will be higher than what they paid to buy, for the certificates/tokens that they hold as on its maturity date, allowing them to make a profit when they take delivery of harvested grains and sell them in the market,” informs Anubhav.

Every VFGA has a maturity date. After this date its no longer a tradable asset. On the maturity dates the pool of farmers that collectively offer VFGA’s deliver post harvested grains at the collection place as mentioned in the documents of the respective VFGA(s) certificates/ token(s). The last holder(s) of certificate(s)/token(s) will take delivery of the quantity of post harvested grains as mentioned in the documents of the respective certificate(s)/token(s) they hold; from the collection place.

By introducing Virtual Food Grain Assets as tradable asset on the exchange, Anubhav seeks to fosters a more equitable relationship between farmers and consumers, bridging the gap between farmgate prices and retail prices. Anubhav also emphasizes the integration of environmental, social, and governance (ESG) considerations into agricultural activities, encouraging sustainable farming practices and responsible consumption patterns. He has engaged students of education institutes in India to work on project(s) to develop system(s) and processes to implement his award winning and regulatory recognized idea of VFGA.

The Way Ahead

“Looking ahead, my focus is on leveraging my experience in international finance, particularly in Hong Kong, to contribute to the development of the financial landscape both there and in India. I see immense potential in initiatives such as the Gujarat International Finance Tec- City (GIFT) to further bolster India's position in the global financial arena. Over the next five to ten years, I aim to contribute meaningfully to the development of financial centers while pursuing opportunities for growth and innovation,” concludes Anubhav.

Anubhav Dayal, Founder, Soach Global

Educated in diverse fields, Anubhav holds a Master of Laws in Corporate and Financial Law from The University of Hong Kong, complemented by a Bachelor of Laws from the University of Delhi. With over two decades of banking experience, Anubhav has navigated compliance and regulatory roles at esteemed institutions like HSBC and Societe Generale.