Asian Development Bank logo.
Credit: Wikimedia Commons
Mumbai: L&T Finance, one of the leading NBFCs in the country, has signed a financing pact with the Asian Development Bank (ADB) for $125 million (Rs 1,041 crores) to support financing in rural and peri-urban areas in India, particularly for women borrowers.
The funding comprises a loan of up to $125 million from ADB and an agreement to syndicate an additional $125 million co-financing from other development partners.
At least 40 per cent of the proceeds are allocated for women borrowers, while the rest will support farmers, Micro, Small and Medium-sized Enterprises (MSMEs), as well as loans to purchase 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."
Suzanne Gaboury, Director General, Private Sector Operations Department, ADB, said, “Rural India, with 65 per cent 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.”
Despite steady rural economic growth, rural communities face significant barriers in accessing financial services. About 70 per cent of marginal farmers do not have a bank account, and 87 per cent lack access to credit. Women are disproportionately affected, with only 14 per cent having access to credit.
Microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans have been identified as segments with strong growth potential anticipated in the medium term. By focusing on lending in rural and peri-urban areas of lagging states in India, the project is strategically aligned with the goals of the Ministry of Rural Development.