L&T Finance, one of India’s leading non-banking finance companies (NBFCs), has signed a $125 million financing agreement with the Asian Development Bank (ADB) to boost lending in rural and peri-urban areas with a focus on women borrowers. Female borrowers will get 40% of the funds while the rest will go to farmers, the Ministry of Micro, Small and Medium Enterprises (MSMEs) and loans for the purchase of new two-wheelers.
The financing also includes an agreement to syndicate an additional $125 million in co-financing from other development partners, the release said.
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40% of the proceeds will go to women borrowers while the rest of the proceeds will go to farmers and MSMEs as well as loans for purchase of new two-wheelers, it said.
According to a statement from L&T Finance, access to financial services for rural populations remains severely hampered despite continued economic growth in these areas. “About 70% of small farmers do not have a bank account and 87% do not have access to credit. Women are disproportionately affected, with only 14% having access to credit.”
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Emphasizing that the company’s core values of social responsibility and association with ADB are aligned, Sachinn Joshi, Group Chief Financial Officer, L&T Finance, said, “We believe this partnership with ADB is a significant step in our ongoing efforts “To bridge the gap, we will bridge the financial gap and promote inclusive economic growth across the country.” For our company, this long-term loan is part of our ongoing strategy to diversify our sources of financing.”
“At L&T Finance, we recognize the profound impact that financial inclusion has on the communities in which we operate. And through our outreach activities in the underserved and backward states of India, we aim to be a catalyst for empowering individuals, especially women, farmers and MSMEs thereby strengthening economic resilience,” he adds.
The credit markets for microcredit, farm machinery, two-wheelers and MSMEs were found to offer significant growth potential in the medium term. The project’s strategic focus on lending in rural and peri-urban areas of the underdeveloped states of India is in line with the objectives of the Ministry of Rural Development.
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Suzanne Gaboury, Director General of ADB’s Private Sector Operations Department, said: “Rural India, where 65% of the country’s population is engaged in agriculture, contributes almost half of the national income. Capable of providing loans at scale, this partnership with L&T Finance enables ADB to support the livelihoods of individuals and small businesses, with a particular focus on reaching women borrowers.”
