India deploys Agricultural Credit Infrastructure on Avalanche

India's largest agricultural warehousing company has taken a significant step toward digitizing farm finance. Arya.ag is using the Avalanche blockchain to tokenize grain deposits, warehouse receipts, and loan status, giving lenders a more reliable way to verify the crops backing agricultural loans.

Nandan Nilekani, co-founder of tech giant Infosys and project leader of India's Aadhaar identity system, announced the initiative at the Global Fintech Festival in Mumbai. Arya.ag is setting up its own dedicated layer-1 blockchain built using Avalanche technology, and plans to open it up to other warehouse companies in the future.

How the System Works

Electronic warehouse receipts allow farmers and agricultural businesses to borrow against commodities held in storage instead of selling them immediately after harvest. Arya.ag and Ava Labs say the system is designed to give lenders a shared record showing what grain is stored, who owns it, whether it has already been pledged as collateral, and what debt is outstanding.

Finternet will combine farmer, commodity, warehouse, and insurance information into what Sanmesh Kalyanpur, a director at Finternet Labs, called a "composite token" that banks can use when assessing collateral risk. A separate group called Finternet is helping establish the rules for how warehouses and lenders communicate inside the system. Finternet provides digital infrastructure for connecting money and assets globally, a concept Nilekani proposed alongside Agustín Carstens, a former general manager at the Bank for International Settlements and former governor of the Bank of Mexico.

India already recognizes electronic negotiable warehouse receipts (e-NWRs) as instruments that can support loans against crops stored in regulated warehouses, and the blockchain deployment builds on that existing legal structure rather than creating a new ownership claim over the grain. Testing of tokenized e-NWRs began earlier this year, with three major banks joining the dedicated Avalanche layer-1 network.

Scale and Caveats

Arya.ag stores about $2 billion in agricultural commodities across its warehouse network and supports approximately $1.26 billion in loans annually, with its lending arm, Arya Dhan, issuing around $230 million in loans each year. These figures describe Arya.ag's existing business and do not represent assets or loans already brought onchain.

The initial focus is on improving the infrastructure behind warehouse-backed lending rather than claiming a specific impact on credit access, with faster approvals, lower costs, or greater access to credit seen as potential outcomes to be demonstrated as the system is deployed. In 2024, the Indian government launched a 10 billion-rupee credit-guarantee program intended to encourage financing against electronic negotiable warehouse receipts, particularly among small and marginal farmers.

Finternet Labs was co-created by Aadhaar architect Pramod Varma and Chief Executive Officer Siddharth Shetty, with backing from technology industry veteran Nandan Nilekani. The @finternet_org initiative is overseeing the communication rules between lenders and warehouses on the @Avax network.

Sources:
CoinDesk: Indian agri warehouse giant is putting $2 billion in grain-backed loans onchain
CoinTelegraph: Arya.ag Tests Tokenized Grain Ownership Records on Avalanche
YourStory: Finternet, Ava Labs partner to test blockchain lending for farm assets