L&T Finance has signed a financing pact with Asian Development Bank (ADB) for $125 million to support financing in rural and peri-urban areas in India particularly for women borrowers.
The financial support consists of a loan amounting to a maximum of $125 million provided by ADB, along with a commitment to coordinate an additional $125 million in co-financing from various other development partners. A minimum of 40 percent of the funds is designated for female borrowers, while the remaining portion will be utilized to assist farmers, Micro, Small, and Medium-sized Enterprises (MSMEs), and loans for the acquisition of new two-wheeled vehicles.
“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,” said Sachinn Joshi, Group Chief Financial Officer, L&T Finance.
Despite the consistent economic growth in rural areas, accessing financial services remains a significant challenge for rural communities. Approximately 70 percent of marginal farmers do not possess a bank account, and 87 percent lack the means to access credit. Notably, women are disproportionately affected, with only 14 percent having access to credit.
Identified as segments with substantial growth potential in the medium term, microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans play a crucial role. The project strategically aligns with the objectives of India’s Ministry of Rural Development by concentrating on lending in rural and peri-urban areas of underdeveloped states in the country.
“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,” said Suzanne Gaboury, Director General, Private Sector Operations Department, ADB.
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