L&T Finance, one of India's leading non-banking financial companies (NBFCs), has inked a $125 million financing deal with Asian Development Bank (ADB) to promote lending in rural and peri-urban areas with an emphasis on women borrowers. Women borrowers will receive 40% of the funds, while the remaining will go to farmers, the Ministry of Micro, Small, and Medium Enterprises (MSMEs), and loans for the purchase of new two-wheeled vehicles.
The funding also includes an agreement to syndicate an additional $125 million co-financing from other development partners, as per press release.
The proceeds allotted for women borrowers is 40%, while the rest of the proceeds will support farmers, and MSMEs, as well as loans to purchase new two-wheeled vehicles, it states.
According to a statement from L&T Finance, access to financial services remains severely impeded for rural populations, even in the face of consistent economic growth in these areas. “About 70% of marginal farmers do not have a bank account, and 87% lack access to credit. Women are disproportionately affected, with only 14% having access to credit.”
Sachinn Joshi, Group Chief Financial Officer, L&T Finance, highlighted how the company's basic values of social responsibility and association with ADB are in sync, saying, "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,” he adds.
The lending markets for microloans, farm equipment, two-wheeled vehicles, and MSME have all been identified as having significant room for expansion over the medium term. The project's strategic focus on lending in rural and peri-urban areas of India's underdeveloped states is in line with the objectives of the Ministry of Rural Development.
Suzanne Gaboury, Director General, Private Sector Operations Department, ADB said, “Rural India, with 65% 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.”
