L&T Finance, one of the country’s top non-banking financial companies, has signed a USD 125 million finance agreement with ADB to boost financing in rural and peri-urban areas of India, particularly for women borrowers.
The finance consists of an ADB loan of up to USD 125 million and an agreement to syndicate an additional USD 125 million in co-financing from other development partners. At least 40 per cent of the earnings will go to women borrowers, with the remainder going to farmers, Micro, Small, and Medium-sized Enterprises (MSMEs), and loans to acquire new two-wheeled vehicles.
Commenting at the signing ceremony, Sachinn Joshi, Group Chief Financial Officer, L&T Finance said, “This collaboration with ADB aligns with our core values of social responsibility. We believe this partnership with ADB is a significant step and will boost our ongoing efforts of bridging the financial gap and promoting inclusive economic growth across the country. For our Company, this long-term loan forms a part of our continuous strategy of diversifying our funding sources. At L&T Finance, we recognise the deep impact that financial inclusion has on the communities we serve in. And, through our on-lending activities in the underserved and lagging states in India, we pursue to be a catalyst for empowering individuals especially the women, farmers and MSMEs thus foster economic resilience.”
Despite consistent rural economic growth, rural communities confront major impediments to financial services access. Approximately 70 per cent of marginal farmers do not have a bank account, and 87 per cent do not have access to loans. Women suffer disproportionately, with only 14 per cent having access to finance.
Microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans have been highlighted as segments with considerable medium-term growth potential. The project is strategically aligned with the Ministry of Rural Development’s goals by focusing on lending in rural and peri-urban areas of India’s lagging states.
Suzanne Gaboury, Director General, Private Sector Operations Department, ADB said, “Rural India, with 65 percent of the country’s population engaged in agriculture, contributes almost half of the national income. This partnership with L&T Finance, which has the capacity to provide credit at scale, allows ADB to support individual livelihoods and small businesses, with a specific focus on reaching women borrowers.”