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April 15, 2021

Whrrl: Facilitating Agricultural Finance through Block-

Chain Technology
In the beginning of August 2020, more than four months after Prime Minister Modi announced
the first nation-wide lockdown as a measure against the COVID-19 pandemic in India, the
government proclaimed a slew of measures to liberalise the agricultural market in India and ease
the pressure being felt by farmers across the country. Ashish Anand and his team at Whrrl had
navigated the pandemic reasonably well thus far but they were now faced with a decision that
would significantly impact their future direction and trajectory.

Whrrl: Blockchain for Indian Agriculture

Whrrl Fintech Pvt. Ltd. was founded in 2019 as a block-chain 1 enabled platform for warehouse
receipt financing (WHR financing), an instrument of asset-backed lending for agricultural
producers 2. The platform is designed to connect farmers/traders, warehouses and banks for loan
transactions based on warehouse receipts issued against agricultural produce.

Anand, the CEO of Whrrl, founded the company in January 2019 with two other co-founders
whom he had met the previous year as part of the Blockchain Advisory Council (BAC) 3. A
qualified Chartered Accountant, Anand spent his early years in financial risk management for
commodities and foreign exchange markets, before moving onto debt syndication and providing
CFO services for MSMEs. In early 2018, with the desire to create value for industry and MSMEs
in particular, he looked for opportunities to build end-to-end solutions instead of being just an
advisor or a consultant. At this point, he came across and developed a deep interest in blockchain
technology and explored how it could be used for the MSME market. Anand went on to co-found
BAC to explore such opportunities and brought more than a hundred consultants on board to
collaborate on the application of blockchain technology in different industries.

1Blockchain is a transaction database shared by all nodes participating in the system. It makes the history of a
transaction unalterable and transparent through the use of cryptographic hashing and decentralization respectively.
This allows people to share valuable data in a secure manner and thus reduced risks and frauds and brought
transparency at a scale.
2 The name ‘Whrrl’ refers to warehouse receipt loans.
3 Blockchain Advisory Council (BAC) was co-founded by Ashish in 2018 as an advisory and consulting firm

specialising in digital, crypto, decentralised, blockchain and information technologies.

Prepared by Professor Vidya Vemireddy, Shrey Deb and Shweta Yadav, Research Associates of Indian
Institute of Management, Ahmedabad.
Funding support provided by Case Centre, IIM Ahmedabad is gratefully acknowledged.
Cases of the Indian Institute of Management, Ahmedabad, are prepared as a basis for class discussion.
Cases are not designed to present illustrations of either correct or incorrect handling of administrative
problems.
© 2021 by the Indian Institute of Management, Ahmedabad
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While looking at multiple applications for blockchain, Ashish became particularly interested in
WHR Financing after reading about the Qingdao scandal 4. In WHR financing, banks or other
financial institutions provide loans to farmers and traders against agricultural produce kept in a
certified and independently controlled warehouse. The financing process involves a chain of
interaction between farmers, traders, warehouses, collateral management agencies and banks.
Due to the presence of multiple actors in the chain and the lack of mechanisms to sync these
operations, transactions can be time consuming, resource intensive and subject to a great deal of
risk.

Blockchain technology seemed very suitable as a solution for these problems, as it allowed for (a)
automation of the existing manual procedures and (b) a common connecting platform for the
multiple players involved in the transaction chain. This brought ease and transparency to the
transaction and thereby reduced costs and risks associated with the loan.

Through BAC, Anand met Abhishek Bhattacharya, a young and talented developer in blockchain
and Paul Scott, a tech entrepreneur, both of whom came on board as the founding team at Whrrl.
The team also included Falguni Pandit, Anand’s wife and an experienced tech professional, as
CTO.

The Whrrl platform was launched in January 2020 with the start of its pilot with the Maharashtra
government. By August 2020, they had spread their reach to over 1250 warehouses and 3 banks
within the state of Maharashtra.

Background: Indian Agriculture and the Role of Financing

Agriculture and allied activities contributed a cumulative total of USD 244 billion to national GDP
in 2016 and recorded a Compound Annual Growth Rate (CAGR) of 6.6% between 2007-2016. 5
However, despite the fact that 46% of India’s population continues to be employed in agriculture,
agriculture’s share of contribution to GDP is not commensurate. The share of agriculture and
allied sectors amounted to 17% of the gross value added (GVA) GDP in 2016-2017. 6

While low agri-growth and productivity can be attributed to several interrelated factors such as
poor market linkages, inadequate infrastructure, fragmented landholdings and low profitability 7,
a number of studies have identified access to credit as the single important contributor to
agricultural growth (Bharti, 2018; Subbarao, 2012). According to RBI, every 1% increase in real
agricultural credit increased real agricultural GDP by 0.22% with a one-year lag. 8

Recognising the need for credit, numerous initiatives have been undertaken since independence
to increase financial access to the agricultural community resulting in an increase in Formal
Institutional Credit (FIC). FIC includes commercial banks, Regional Rural Banks and

4 In 2014, at Qingdao port in China, fraudulent receipts were issued several times against metals held in warehouses

as collateral for loans. This resulted in storage scams worth $648 million.
5 Bharti, N. (2018). Evolution of agriculture finance in India: a historical perspective. Agricultural Finance Review, 78(3),

pp.376-392
6 Ibid
7 Ibid
8 Subbarao, D. (2012, July 12). Agricultural credit – Accomplishments and Challenges. Reserve Bank of India. Retrieved

from https://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/ACACHA120712.pdf

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cooperatives. For instance, between 1950 and 2002, the share of FIC as part of total credit increased
from 7% to 61%. Credit intensity in agriculture, defined as ‘ratio of agricultural credit to
agricultural GDP’, increased from 12% in the early 1970s to 67% by 2010-11 9.

Notwithstanding these positive developments, the agricultural financial market in India is still
underdeveloped. As per the RBI, the supply of agricultural credit well behind the demand - the
gap had widened between 2002-03 and 2007-08 from 4% to 33%. 10 Overall, India has the second
highest number of financially excluded households at a global level, with only 34% households
engaged in formal banking. 11 A recent study found that among the 1.1 billion unbanked adults
globally, 102.9 million were from India. 12 As of 2017, only 69% of adults in India had a formal
bank account (for adults in high income economies, the figure stands at 94%). Apart from this
income aspect, there was also a rural-urban disparity in financial markets, specifically for
agriculture. For instance, only 20% of private sector banks’ ATMs and 9% of public sector banks’
ATMs are located in rural areas. 13 Furthermore, rural credit comprised only 10% of the total
commercial bank advances. 14

The above gaps existed primarily because the formal financial sector viewed the rural population
and, in particular, agriculture to be high-risk. The major risk factors included the lack of
information on the borrower, poor credit track record and repayment capacity, lack of
accountable systems giving rise to the problem of moral hazard (i.e., non-willingness on the part
of the borrower to repay back the loan). In effect, high risks resulted in high transaction costs as
there were increased mitigation activities such as borrower appraisal, processing, documentation,
disbursement charges, loan monitoring/supervision and collection. These transaction costs
increased the cost of lending and consequently the borrowers’ cost of availing funds. 15 16

In this context, technological innovations had shown the potential to create a paradigm shift in
the evolution of the financial markets 17, with reduced risks and transaction costs that would drive
down the cost of lending and increase access to agricultural financing.

Warehouse Receipt Financing: Key Factor in Indian Agricultural Finance

Warehouse receipt financing (WHR financing) provides farmers and traders access to working
capital by allowing them to avail bank loans against their deposited goods at a registered
warehouse. In such a transaction, goods are deposited at the warehouse which issues receipts as

9 Ibid.
10 Ibid.
11 Vighneswara, S. (2016). Analyzing the agricultural value chain financing: approaches and tools in India.

Agricultural Finance Review, 76(2).

12 Panda, B. & Joy S. (2019). Dynamics of Technological Evolution in Indian Banking. Retrieved from

https://www.nibmindia.org/admin/fckImages/B%20Panda%20319-343(1).pdf

13 Grant Thornton (2017). Financial Inclusion in Rural India, Banking and ATM sector in India. Retrieved from

https://www.grantthornton.in/insights/articles/financial-inclusion-in-rural-india/
14 Vighneswara, S. (2016). Analyzing the agricultural value chain financing: approaches and tools in India.

Agricultural Finance Review, 76(2).

15 Ibid
16 See note 8 above.
17 Bhatt, V. V., & Mundial, B. (1989). Financial innovation and credit market development (No. 52). Washington DC: World

Bank.

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an evidence of the deposited goods. These receipts serve as a financial instrument to provide
loans with the commodity as a collateral. It carries information about the deposited goods’
ownership, amount and characteristics and warehouse location. Upon receiving a loan
application from the borrower, banks conduct verification of the goods and the depositor’s
identity (usually through an agency), after which they disburse the loan.

A brief overview of the key participants and stakeholders in WHR financing in India is presented
below.

1. Lenders: These include banks, public sector entities (Agricultural Produce Market Committee
[APMC], Central Warehouse Corporation [CWC], State Warehouse Corporation [SWC],
National Bulk Handling Corporation [NBHC], National Collateral Management Services Ltd.
[NCML]) as well as companies/ final buyers. 18

2. Borrowers: For private lending, borrowers include farmers (small, medium and large) and
traders. Of these, traders have been the dominant borrowers and are targeted by banks and
private agencies (collateral management agencies) as potential clients to avail WHR
financing. 19 For public lending, the borrowers of Agriculture Produce Marketing Agency
(APMC), Warehouse Corporation and National Collateral Management Services Ltd (NCML)
comprise farmers and trader communities. 20

3. Warehouses: As of September 2015, agricultural warehousing accounted for 15% of the

warehousing market in India and was estimated to be worth INR 85 billion. 21 Warehouses
were classified broadly based on ownership and more narrowly based on their registration
status with respect to Warehouse Development Regulatory Authority (WDRA). Based on
ownership, these were either public or private 22; around 71% of the (agricultural) warehouse
capacity was run by state-owned enterprises such as FCI, CWC and SWCs, 16% by private
players and 13% by various cooperative agencies. 23 As of 2015, there were about 55,000
warehouses in India out of which 735 (having a combined capacity of 6.6 million tonnes) had
a valid registration with the WDRA. 24 Moreover, of these 735 warehouses, only 140 issued
Electronic Negotiable Warehouse Receipts (e-NWR). There were also operational process
variations in the WHR transaction processes based on the warehouse's ownership and
registration.

18 Jairath, M. S., Haque, E., & Anu, P. V. (2016). Issues Limiting the Progress in Negotiable Warehouse Receipt (NWR)
Financing in India. Agricultural Economics Research Review, 29, 53-59.
19 National Institute of Public Finance and Policy (2015). Report on warehousing in India Study commissioned by the

Warehousing Development and Regulatory Authority. Retrieved from

https://wdra.gov.in/documents/32110/38476/Report12.pdf/fcfa2f56-a673-a5f6-a870-f73292eab04a
20 See note 18 above.
21 See note 19 above.
22 BusinessWire (2020, May 21). The Warehousing Market in India 2020; Expected to be Worth INR 2,821 Billion by 2024 -

ResearchAndMarkets.com. Retrieved from https://www.businesswire.com/news/home/20200521005412/en/The-

Warehousing-Market-in-India-2020-Expected-to-be-Worth-INR-2821-Billion-by-2024---ResearchAndMarkets.com )
23 See note 19 above.
24 Hussain, S. (2018, September 25). Warehousing receipt system: the missing link. Live Mint. Retrieved from

https://www.livemint.com/Opinion/yFKdPGvwK5IHsKtSChpmwJ/Opinion--Warehousing-receipt-system-the-
missing-link.html

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4. Collateral Management/ Verification Agency

Collateral Management agencies are professional agencies entrusted with the care and
custody of collateralized goods. Key management activities include ensuring lender
possession, quality & quantity certification and movement monitoring. 25 The appointment of
the collateral management/verification agency depends on the category of the warehouse
involved. For public WDRA registered warehouses, WDRA agencies does the verification
themselves while in case of public non-WDRA registered warehouses, the verification
agencies are appointed by the banks. In case of private non-WDRA registered warehouses,
the verification is done either by bank appointed agencies or their own collateral managers
(at the deposit stage itself).

In 2016, banking institutions advanced loans worth INR 400 billion against agricultural
warehouse receipts. Traders were the dominant users of warehouses across the country and were
also the largest customers of warehouse receipt financing. 26 A strong and stable warehousing
ecosystem could reduce price volatility for agricultural commodities 27 by bringing together
farmers, traders, warehouses and markets across India. 28 In theory, WHR financing allowed
borrowers (farmers/traders) to get access to credit as working capital for the ensuing season, free
up fixed assets for productive investment and facilitated price discovery of agricultural produce.
For lenders, the collateralized produce provided a default guarantee to banks with respect to the
loan transaction. This reduced the risk of provisioning for bad loans and therefore lowered the
cost of financing.

Warehouse Receipt Financing: Problems and Opportunities

While the possible potential for WHR financing was certainly appealing, one of the major
problems was that the process left a lot of scope for human error and fraudulent activities. In the
past, the WHR receipt financing sector had witnessed cases of duplicate loans being sanctioned
against the same collateral, fake collateral pledged against loan applications and fake (duplicate)
receipts circulated in trade deals. These security issues were present globally and had been a
major source of concern for banks and other players who bore the brunt of the risk in such
transactions.

In 2014, at Qingdao port in China, fraudulent receipts were issued several times against metals
held in warehouses as collateral for loans. One of the leading reasons was manual cross-checking
of records 29 and poor security features, 30 which made it difficult for banks to verify the ownership

25 Dey, K., & Alur, S. (2016). Warehouse to Manage Collateral—Kaul’s Dilemma. Asian Case Research Journal, 20(01),
133-175.
26 See note 19 above.
27 Note- Within the diverse agricultural commodities, Whrrl focuses largely on grains, pulses and cash crops that can

be stored in ambient warehousing, as banks are hesitant about lending against perishable commodities.
28 See note 24 above.
29 Burton, M. (2017, January 2017). Forged Warehouse Receipts Renew Worries of Commodities Fraud.

BloombergQuint. Retrieved from

https://www.bloombergquint.com/markets/forged-warehouse-receipts-renew-concerns-over-commodities-fraud
30 Assalve, D. & Ma, E. (2017, December 06).WAREHOUSING: The biggest warehouse frauds of recent times.

Fastmarkets Metal bulletin. Retrieved from https://www.metalbulletin.com/Article/3768844/WAREHOUSING-The-

biggest-warehouse-frauds-of-recent-times.html

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and previous loan records for commodities kept in private warehouses. 31 The Qingdao port
storage scam ultimately amounted to USD 648 million. 32 In the aftermath of this incident, access
to credit became difficult for Chinese metal companies. 33

In another instance in 2017, forged receipts bearing the name of Access World warehouse
company were circulated in Asia. Like the Qingdao fraud, this was also due to usage of manual
receipts with poor security features. In this case, banks were the major financial victims with
losses exceeding USD 300 million. 34

Similar fraudulent practices have also occurred in India. In 2007, ICICI Bank experienced frauds
to the extent of INR 1.5 billion that resulted in no WHR based lending for five years. The root
cause of the fraud could be attributed to collusion between a collateral management agency and
warehouse to issue warehouse receipts over inflated or non-existent stocks. 35 Other significant
frauds involving Laxmi Vilas bank worth INR 820 million in 2017 and State Bank of India worth
INR 600 million in 2018 had also shaken the banking industry. Thus, on an annual basis, India
experienced a fraud of INR 500 million to INR 1 billion on an average.

Most notably, in 2013, India experienced its biggest scam yet, at the National Spot Exchange Ltd,
which eroded investor wealth of around INR 55 billion. The modus operandi involved trade
based on bogus warehouse receipts with the complicity of multiple players. 36

The most recent example of fraud occurred in 2019 wherein more than a dozen commercial banks
in Andhra Pradesh lost a cumulative total of INR 4 billion. The paddy and cashew stock which
traders pledged for loans to various banks were replaced by husk and cashew shells. The fraud
was an outcome of security coordination failure at multiple levels- borrower (trader), collateral
management agency and banks. This happened in an era when banks had begun to outsource
non-core functions to private operators. Earlier, the pledged commodities used to be locked inside
the borrowers’ godowns under banks’ supervision. In the instant case, however, the godown
management and control was with collateral management agents as approved warehouse service
providers. 37

31 See note 29 above.

32 Fuzamei (2018, September 04). How Blockchain Can Prevent Warehouse Receipt Financing Fraud. The Medium.
Retrieved from https://medium.com/@fuzameitwitter/how-blockchain-can-prevent-warehouse-receipt-financing-
fraud-32933d89a0b3
33 See note 30 above.
34 Ibid.
35 Alexander, G.S. (2007, January 19). ICICI takes Rs 150-cr hit on farm loan fraud. The Economic Times. Retrieved from

https://m.economictimes.com/industry/banking/finance/banking/icici-takes-rs-150-cr-hit-on-farm-loan-
fraud/articleshow/1289166.cms
36 Shenoy, D. (2013, September 23). NSEL: The 5,500-crore Scam No One Wants to Deal With. Retrieved from

https://www.capitalmind.in/2013/09/nsel-the-5500-crore-scam-no-one-wants-to-deal-with/
IANS (2014, May 7). Jignesh Shah, another arrested in NSEL scam. Retrieved from https://www.business-
standard.com/article/news-ians/jignesh-shah-another-arrested-in-nsel-scam-114050701532_1.html

37 Rao, M.T. (2019, December 13). Traders Defrauded several banks of Rs 400 crores in Andhra Pradesh. United News

of India. Retrieved from http://www.uniindia.com/traders-defrauded-several-banks-of-rs-400-cr-in-andhra-

pradesh/south/news/1820699.html

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The other major issue with WHR financing was that the transaction processes were manual and
characteristically longer, less efficient, non-communicative and non-transparent. As a
consequence, the process was time consuming, resource intensive and subject to a great deal of
risk. For instance, for the same customer, a WDRA registered warehouse and a bank would add
the respective depositor’s information and borrower’s information separately on the National e-
Repository Ltd (NERL) platform. They would then check the other involved party’s information
manually. This would happen because their respective transaction records did not communicate
with each other despite using a common platform. Hence, the system was far from optimal and
prone to inefficiencies, manual error as well as manipulation.

Whrrl: Reinventing Warehouse Receipt Financing

While Anand had assembled the core team of Whrrl in early 2019, he got validation for the
concept as early as March 2019 with only a presentation, as it was selected as one of the top 15
start-ups at the Money 2020 (APAC 2019 edition) conference.

As a concept, Whrrl’s platform was a blockchain platform that solved the problem of security and
inefficiency in the asset-backed lending process, particularly in Warehouse Receipt Financing
where the financial case was significant.

Whrrl was designed as a combination of two main components: the blockchain platform at the
back-end that connected warehouses and banks; and the mobile app for farmers and traders that
connected them with warehouses and banks.

The blockchain platform was built first as the core of the solution. The platform enabled access to
information and communication between warehouses and banks through automatic updates on
the common platform. The modular infrastructure ensured that the data was recorded, stored
and updated in a distributed manner which meant that, unlike the NERL/CCRL systems, it did
not have to rely on centralized nodes and was hence more secure. Further, these transactions were
immutable in that the records could not be reserved and changed unless the change was initiated
by the controlling authority. This ensured greater security of the recorded transactions.

The second feature of the blockchain platform was a ‘smart contract’ system which, as a part of
this infrastructure, provided coordination and enforcement for agreements between digitally
networked participants without the need for traditional legal contracts 38. This ensured trust
without the need for human intervention.

The next important blockchain feature was ‘zero knowledge proof’, which allowed for preserving
anonymity of bank transactions while also proving its existence for verification. The former was
important to maintain the privacy of user/prover’s sensitive information (the banks, in this case).
Using this feature, one party (the prover) could prove to another party (verifier) that a specific
statement (of transaction) is true, by providing most essential information, without disclosing any
extraneous statement(s). 39

38Voshmgir, S. (2019). Block chain hub Berlin. Retrieved from http://blockchainhub.net/smart-contracts/

39Bhardwaj, C. (2020, January 9). What is Zero-Knowledge Proof & its Role in the Blockchain World? Retrieved from
https://appinventiv.com/blog/zero-knowledge-proof-blockchain/

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Lastly, the platform allowed for tradability of the produce. At the time of its deposit at the
warehouse, tradable tokens were generated for each deposit. This served a dual advantage: it
could be used for sale to traders and banks could also sell the depositors’ produce in case of
default.

The mobile application was built in late 2019, when the team realised that they would need to
move beyond the B2B space in future. This would serve three purposes: first, it provided
information on the warehouse location and storage space availability. Second, it allowed
booking/scheduling delivery with respect to a particular warehouse on a particular date and
time. Third, it allowed for loan application filing, information on loan application (post
completion of delivery process). This front end application service was separate for farmers but
communicated with the block-chain.

The application and the block-chain platform automatically communicated with each other
thereby eliminating the need for manual entries from farmers, banks and warehouses.

The third component being built alongside (but only conceptually ready) were the IoT devices
that would be used to safeguard and track the goods being stored as collateral. The team
considered this to be a vital part of a holistic solution for warehouse receipt financing in the
future.

While Whrrl was conceptualized as a response to the problem of frauds in WHR financing, the
team recognised that they could solve a major issue in Indian agricultural finance. Their proposed
solution could single-handedly improve efficiency and reduce uncertainty in a highly volatile
market that affected the livelihoods of millions of farmers. (See Exhibit 1)

Starting-up: the journey, challenges and lessons learnt

In September 2019, Whrrl landed their first contract through a chance meeting with the IT
secretary of Maharashtra, who gave them the approval for a pilot in 5 locations of Maharashtra
covering 16 warehouses operated by the Maharashtra State Govt. Warehousing Corp and
financed by Maharashtra State Co-op Bank.

However, with political instability and a change in government in Maharashtra in late 2019, the
pilot was postponed till January 2020 – it was only on January 21, 2020 that they were able to start
operations on the ground.

The team set up the blockchain platform at the promised 16 warehouses and 2 banks and over
the next 9 weeks or so. Whrrl also facilitated over INR 7 million of loans through eWHR, although
this was not done through their own platform. (See Exhibit 2)

The value proposition being provided by such a solution was significantly changing the way in
which warehouse receipt financing was delivered (See Exhibits 3-7). A summary of these changes
are given below.

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Table 1: Comparison of WHR financing processes
# Activity Traditional process
1 Warehouse discovery Farmer/trader manually
searches for availability at
nearby warehouses to
deposit goods; or in some
cases, through designated
agents.
2 Goods transport and receipt Farmer/trader deposits
generation goods at the warehouse &
receives receipt generated
through private/public
software.
3 Loan application Farmer/trader visits the bank
physically, to make the loan
application; presents the
receipt and (identity)
verification documents in
paper. Banks conduct manual
verification checks.
4 Deposit verification Designated verification
authority conducts manual
checks with respect to
deposited goods at the
warehouse.
5 Loan disbursement Bank disburses loan to the
depositor-borrower’s
account.
6 Access to loan information Farmer/ trader would have to
visit the bank for information.
7 Loan repayment and sale of Farmer/trader repays
produce loan.
At this stage, Whrrl was already in talks with the government for a full-scale launch – over 1,250
warehouses would use Whrrl’s solution for the next 5 years.
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Whrrl process
Farmer/trader uses Whrrl
application to make digital
searches and bookings for
depositing goods at the
warehouse.
Farmer/trader deposits goods at
the warehouse & receives
receipt and tradable token
generated through Whrrl
software.
Farmer/trader uses the Whrrl
application to make the loan
application; presents verification
documents digitally. Banks
conduct e-KYC as part of identity
verification.
Designated verification authority
conducts manual checks with
respect to deposited goods at the
warehouse.
Bank disburses loan to the
depositor-borrower’s account; in
some cases through the Whrrl
escrow account to the depositor-
borrower’s account.
Farmer/trader uses Whrrl
application to check updates with
respect to loan status by bank.
the Farmer/trader repays the loan. In
some cases, he uses the
tradable tokens generated
during good’s deposit for
sale/purchase of the good.
Banks use the tradable tokens
generated on the (collateralized)
deposit to sell the deposit, in
cases of default in loan
repayment.
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The Pandemic

On March 24, 2020, the Indian government announced its decision of nation-wide lockdown in
response to the outbreak of the Coronavirus (COVID-19) pandemic.

The first human cases of COVID-19 were identified in Wuhan, China, in December 2019. As of
July 31, 2020, the pandemic spread rapidly across the world in at least 188 countries with at least
17 million people confirmed as corona positive and 0.68 million deaths. With the rising number
of cases, lack of prior preparedness coupled with lack of scientific know-how about the virus
causing tremendous strain on healthcare infrastructure, the intensity of the crisis became such
that the relatively robust healthcare delivery systems of developed countries also began to show
signs of incipient collapse. As on July 31, 2020, the fatality rate (deaths as a proportion of total
cases) was 15.2% in the UK and 3.4% in the USA. The global fatality rate was 3.9% and in India,
it was 2.1%. 40

Given this situation, many national governments initiated major regulatory measures beginning
with a complete lockdown of the economy and social movement. This caused economies
worldwide to experience a slowdown, with the IMF predicting a 3% contraction in global GDP
for 2020. This had a corresponding effect on unemployment across the globe - the US government
reported that 10% of its potential workforce was out of work 41.

At the same time, the Indian government reported 1.8 million confirmed cases with 36,526 deaths.
This amounted to 9.7% of global cases and 5.4% of global deaths at the time. 42. National GDP
grew at 3.1% in the fourth quarter of 2019-20. 43 According to forecasts, India would experience a
GDP contraction of 5.0% in fiscal-year 2021 (ending in March) from the previous year’s growth
of 1.8% and a permanent loss of output of 10% of GDP relative to the pre-COVID-19 path. 44

Impact on the Indian Economy and Agriculture

The agricultural sector in India provides primary produce that serves both as a necessary
consumption good and as a raw material for various industries. It is thus very much the backbone
of the Indian economy. The nationwide lockdown, announced as a response to the pandemic,
disrupted agricultural supply chains in a major way because of multiple reasons, such as the lack
of steady availability of human resource and transportation facilities, changing dietary habits,
poor liquidity with businesses and lack of widespread access to institutional finance.

40 World Health Organisation (2020, July 31). Coronavirus disease (COVID-19) Situation Report–193. Retrieved from
https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200731-covid-19-sitrep-
193.pdf?sfvrsn=42a0221d_4
41 Jones, L. et al (2020, June 30). Coronavirus: A visual guide to the economic impact. BBC. Retrieved from

https://www.bbc.com/news/business-51706225
42 See note 40 above.
43 Jagannath, J. (2020, May 29). Covid-19 impact: India GDP growth slows to 3.1% in March quarter. Live Mint.

Retrieved from https://www.livemint.com/news/india/covid-19-impact-india-gdp-growth-at-3-1-in-q4fy20-

11590751970512.html
44 Gruenwald, P. (2020, July 1). Economic Research: The Global Economy Begins A Slow Mend As COVID-19 Eases

Unevenly. S & P Global Ratings.

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On June 5, 2020, the Indian government announced a number of regulatory changes with the aim
of easing farmers’ woes (See Table 2 below). The first major implication of these ordinances was
that farmers and traders were now given more autonomy and some degree of facilitative
ecosystem to engage in markets directly. Previously, farmers could only trade their produce in
designated APMC markets (colloquially known as “mandis”) with a tax levy. With the passage
of the new ordinance, farmers could choose the location of sale and purchase at inter and intra
state levels and engage directly with other value chain actors (e.g., processors, wholesalers,
aggregators, retailers and exporters). As a safeguard for farmers, traders would have to
compulsorily make payments within 1-3 days and also provide receipts to farmers. Further,
warehouses would be designated at market-yards and connected with transportation facilities.
For the trade carried as part of the ordinance, no market fee would be levied.

Second, the measures as part of ordinance encouraged the use of electronic trading platforms as
a means of connecting the agricultural producers and traders with markets. Any person/entities
(with verified identification documents like PAN) such as private players, farmer producer
organisations or agriculture cooperative societies could establish and operate e-trading platforms.
The Ordinance also prohibited state governments from levying any market fee, cess or levy on
farmers, traders, and electronic trading platforms for any trade under the ordinance. Further, it
provisioned for an information dissemination framework for price information and market
intelligence system (a system with processes for collecting relevant information on prices,
demand and supply at domestic and global levels). Additionally, both warehouses and APMC
mandis were to be connected with the National Agricultural Market (eNAM) portal.

Table 2: Major regulatory changes and its implications for Whrrl

S.No. Ordinance Change Implication for Whrrl

1. Permitted trade outside APMC at intra Access to wider markets (i.e.
and inter-state level. Earlier, farmers outside APMC) for
could trade only in APMC controlled producers/ traders
mandis. Moreover, different states had
different APMC legislations.
2. No state levied market fee, cess, levy for No state levied market
farmers & traders in new trade areas. The transaction cost for farmers,
taxes at APMC, which was the permitted traders.
trade area prior to the ordinance, ranged
between 1-8.5% across states.
3. Mandatory payment within 1-3 days and Greater transaction security
issue of receipts by traders to farmers. to farmers for their deals with
The Farming traders.
4. Produce Trade and No state levied market fee, cess or levy on Reduction in market
Commerce electronic trading platforms for any trade transaction costs for e-
(Promotion and under as part of the ordinance. platforms participants.
Facilitation) Also, greater competition
Ordinance, 2020 among e-trading platforms
due to greater number of
entrants.
5. Any person/entity with a PAN can Greater competition among
establish and operate e-trading platforms. e-trading platforms.

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S.No. Ordinance Change Implication for Whrrl

6. Provision for creation of an information Informed market decisions of
dissemination framework that provides producers/traders.
price information and market intelligence
system on demand-supply.
7. The Farmers Farmers allowed to directly engage with Farmers’ access to markets
(Empowerment and processors, wholesalers, aggregators, outside APMC;
Protection) retailers and exporters. Farmers’ direct engagement
Agreement on Price with other value chain actors
Assurance and
Farm Services
Ordinance, 2020
8. Others Designation of warehouses as market- Greater connectivity of
yards, to be connected with e-NAM and warehouses with markets.
transportation facilities.
9 Integration of APMC mandis with e-NAM Greater competition among
portal. e-trading platforms.

Impact on Whrrl’s future: Start-up strategy in times of great uncertainty

With such major changes taking place in the ecosystem, Anand and his team at Whrrl were left
wondering about their next steps.

While the lockdown had temporarily slowed down the progress of their pilot operations in
Maharashtra, they went ahead with their full-scale roll-out without any additional funding from
the government (See Exhibit 8). However, even with such progress, it did not seem likely that the
government would be a paying customer for Whrrl anytime soon. Things seemed to be moving
slowly with private players as well. While there was a lot of interest being shown by private banks
to conduct pilots, none of them were willing to commit to confirmed future partnerships. So,
although their work with the government was an impressive proof of concept, talks with major
banks did not result in anything tangible.

This situation seemed to validate Anand’s understanding of the Indian market. Even though the
team had a good case for becoming an agri-finance player in India, Anand had never envisioned
Whrrl to be limited to India or the sector; instead, his vision of Whrrl was to be the solution of
choice for any asset-backed lending across the globe.

In such a situation, Anand could stick to the original plan i.e., focus on the pilot in India for about
a year and then move into warehouse financing in other emerging markets, particularly south-
east Asia – where most trade was routed through China but lending happened in Singapore and
Hong Kong. This also included the market for agricultural warehousing in Africa, with countries
such as South Africa, Ethiopia, Kenya and Tanzania being the most viable due to the existing
infrastructure for warehouse finance and the large volumes of agricultural production. These

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emerging markets, which mostly involved warehouse receipt financing for commodities such as
agricultural cash crops, metals and crude oil, could be estimated at USD 150 billion 45.

Further, there were many reasons to not get deeper into the Indian agri-financing market: firstly,
the market simply was not big enough – internal market research showed that the commodity
finance market for south-east Asian market, which mostly came from Hong Kong and Singapore,
was more than ten times larger than the Indian market (~USD 12-13 billion); secondly, the Net
Interest Margin (NIM) for bankers in agricultural warehouse financing in India was between 1-
3%, which was significantly lower than the margins (4-8%) on other types of financing such as
agri-equipment financing, unsecured MSME loans and other supply chain finance. Both of these
factors hurt the commercial case for competing in this market. Thirdly, the public sector made up
a large part of the market and the government did not yet see warehousing finance as a major
priority.

However, the policy changes announced for the agricultural market opened up new
opportunities for Whrrl and gave them something to think about. Whrrl now had the chance to
capitalise on their presence with warehouses and become a significant player in agricultural
trading, as a trading platform for agricultural produce. This crucial positioning along with their
technological superiority could prove to be a business case worth exploring. However, this move
would definitely be resource intensive and would need the team to develop great expertise in the
operations of agricultural trading, which would be a deviation from their core competence of
building technology solutions for asset-backed lending.

Acknowledgements

Funding support by IIMA Case Centre is gratefully acknowledged. We also thank the Bharat
Inclusion Initiative at CCIE.CO for their support in the development of the case.

45 Based on field data, as per internal market research by Whrrl

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Notes and Annexures

Exhibit 1: WHRLL’s value proposition

S. Features Beneficiary Value proposition Advantages over

No. traditional process

1 Immutability Lenders Security: Traditional

Records were reserved and could not processes, involving
be changed unless change was multiple parties and
initiated by the controlling authority. platform, were prone
to manual error as
well as fraud.

2 Propagation Multi Efficiency & simplification: Traditional

Layer Stakeholders All applications and transactions on processes were
(Farmers, farmer’s app (off-blockchain) and on manual therefore
Banks, block chain automatically took more time and
Warehouses) communicated with each other. effort.

3 Modular API Warehouses & Decentralization & transparency: Traditional

Infrastructure Banks Data does not have to rely on processes passed
centralized node, gets recorded, through centralized
stored and updated through NERL
blockchain’s distributed ledger
technology (DLT)

4 Smart contract Warehouses & Efficiency & trust:

Banks Auto-executing commands that
removed the need for human
interference. Every action on WHR
updated the smart contract to reflect
the latest changes, visible via the
Explorer at all times. Going forward,
the smart contracts would take live
commodity prices from the price
oracle to initiate certain intended
actions - all with the trust of a
decentralized system. The behaviour
mimicked that of legal contracts, and
formulated a participant’s right and
obligation on their digital assets.

5 Digital farmers’ Farmers Access & convenience: Traditional

application In-house discovery platform for processes were
detecting warehouse location and manual therefore
storage availability. This was took more time and
available to farmers on their mobile effort and involved
phone . the depositor
physically making
rounds of the
warehouses.

6 Digital loan Access, efficiency & simplification: Traditional

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S. Features Beneficiary Value proposition Advantages over

No. traditional process

application Farmers could file for loan application processes were

online. manual therefore
took more time and
effort and involved
the borrower
physically visiting the
banks.

7 100% Efficiency: Traditional

electronic Connected warehouses, banks and processes were
depositors. manual or email
driven therefore took
more time and effort.

8 Digital KYC Efficiency: Traditional

Connected banks and customers processes were
electronically. manual or email
driven therefore took
more time and effort.

9 Zero Anonymity:
knowledge Recorded bank transactions to prove
proof (Not built) its existence without revealing its
details/features to others.

10 Trading Tradability: Traditional

platform Tradable tokens were generated for processes did not
through each deposit. involve any such
tradable tokens Traders could get aggregated tokens to facilitate
information about different trade or recovery in
warehouses. case of default.
Banks could sell the depositors
produce in case of default.

11 IoT devices Traceability & security: Absence of these

The blockchain reliably stored the devices resulted in
communication of smart (hardware) frauds.
devices as part of collateral
management within the internet of
things.

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Exhibit 2: Whrrl’s transactions before the pandemic

Metrics 2020
Jan Feb Mar
States 1 1 1
No. of Locations 5 5 5
No. of Warehouses 16 16 16
No. of Banks 2 2 2

eWHR Generated (Rs. Cr.) 1 7 16

Govt - 5 13
Farmers 0 1 1
Agri Traders 1 2 2
Co-operative Societies - - -
Other Entities - 0 0

Quantity (MT) 249 1092 2751

Govt. - 564 1806
Farmers 55 202 291
Agri Traders 194 318 643
Co-operative Societies - - -
Other Entities - 9 11

e-WHR Loans- Rs Lacs 10 38 26

Farmers 7 35 23
Traders 3 3 3

Whrrl Platform eWHR Loans- Rs Lacs - - -

Farmers - - -
Traders - - -

Whrrl Platform eWHR Loans- No of Customers - - -

Farmers - - -
Traders - - -

Non-blockchain Banks eWHR Loans- Rs Lacs 10 38 26

Farmers 7 35 23
Traders 3 3 3

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Exhibit 3: WHR financing processes for different types of warehouses

Process Private Warehouse Public Warehouse

Non-WDRA registered WDRA registered Non-WDRA registered

Stage 1 Private warehouses designated agents The farmer manually searched for availability of
to bring the customer and their goods at warehouse spaces nearby and took his produce
the warehouse. there.

Stage 2 Warehouses used private ERP Warehouses used Warehouse used ERP
systems to generate receipts. NERL systems to software/manual to
These receipts were manually emailed generate receipts. generate receipts.
to the banks These receipts were
automatically available
for the banks
connected via the
same platform

Stage 3 The depositor owner took the loan application to the banks manually.

Stage 4 Banks conducted the verification Bank checks for Banks conducted the
checks about the borrower’s identity availability of receipts verification checks about
and the deposit with the help of on NERL platform. the borrower’s identity
verification agencies (VA). Their and the deposit with the
activities included verification of the It would then get the help of third-party
goods and submission of verification identity of the depositor agencies/ internal teams.
reports to the bank. verified (manual or
KYC). Verification Agency
In case the warehouse was also the visited the warehouse
Collateral Management Agency (CMA), The WDRA inspector and inspected the goods,
verification of goods was done at the visited the warehouse sent verification report to
time of deposit itself. Warehouse emails and inspected the the bank.
receipt and other financial/nonfinancial goods (unscheduled),
to the banks. (In some cases, software then uploaded
such as ECBF were used to generate verification reports on
electronic storage receipts). WDRA platform

Stage 5 Loan was disbursed to the depositor’s Loan was disbursed to Loan was disbursed to
account. the depositor’s the depositors account.
account.

Loan information was

updated on the
common NERL
platform.

Stage 6 Farmer repaid the loan prior to the sale of his deposited produce.

Stage 7 Goods sold online at e-

NAM platform by
depositor or through
NERL platform by bank
(in case of default).

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Exhibit 4: WHR financing for Non-WDRA Public Warehouse

Exhibit 5: WHR financing for NERL/WDRA Registered Public Warehouse

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Exhibit 6: WHR financing for Non-WDRA Private Warehouse

Exhibit 7: WHR financing for Whrrl-registered Warehouse

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Exhibit 8: Whrrl’s transactions post the pandemic

Apr May Jun July

States 1 1 1 1
No. of Locations 5 195 193 193
No. of Warehouses 16 1250 1250 1250
No. of Banks 2 3 3 3

eWHR Generated (Rs. Cr.) 14 661 1644 653

Govt 12 622 1578 629
Farmers 1 12 11 4
Agri Traders 0 12 26 12
Co-operative Societies - - - 0
Other Entities 0 16 29 8

Quantity (MT) 2317 98,688 2,38,613 86,066

Govt. 2013 92,810 2,28,206 81,734
Farmers 206 1870 2398 1051
Agri Traders 80 3147 6330 2669
Co-operative Societies - - - 72
Other Entities 18 861 1680 541

e-WHR Loans- Rs Lacs 14 148 257 576

Farmers 4 77 88 100
Traders 11 72 169 475

Whrrl Platform eWHR Loans- Rs Lacs - 10 4 450

Farmers - 10 4 50
Traders - - - 400

Whrrl Platform eWHR Loans- No of Customers - 4 2 20

Farmers - 4 2 18
Traders - - - 2

Offline Banks eWHR Loans- Rs Lacs 14 138 253 126

Farmers 4 67 84 51
Traders 11 72 169 75

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