New Delhi [India], November 24 (ANI): The Asian Development Bank (ADB) has entered into a collaboration with L&T Finance, signing a USD 125 million loan agreement aimed at enhancing financial access for women, farmers, and micro, small, and medium-sized enterprises (MSMEs) in rural and peri-urban areas of India.
According to ADB, the funding package, consisting of a USD 125 million loan from ADB and an agreement to syndicate an additional USD 125 million in cofinancing from other development partners, underscores the commitment to supporting sectors vital to India’s rural landscape.
A notable aspect of this initiative is the allocation of at least 40 per cent of the proceeds specifically for women borrowers, recognizing the unique challenges they face in accessing financial services.
Rural India, where 65 per cent of the population is engaged in agriculture, plays a pivotal role in the nation’s economic landscape, contributing nearly half of the national income.
Despite this, rural communities encounter substantial barriers in accessing financial services. The partnership between ADB and L&T Finance aims to address this gap by providing credit at scale, supporting individual livelihoods, and fostering the growth of small businesses.
ADB Director General for Private Sector Operations, Suzanne Gaboury, highlighted the strategic focus on reaching women borrowers through this collaboration with L&T Finance.
Gaboury 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.”
The initiative not only seeks to address financial inclusion challenges but also aligns with the goals of India’s Ministry of Rural Development by concentrating on underserved and lagging states.
In rural areas, financial services have been limited, with about 70 per cent of marginal farmers lacking a bank account and 87 per cent lacking access to credit.
Women, in particular, face significant disparities, with only 14 per cent having access to credit. The ADB-L&T Finance partnership identifies microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans as segments with strong growth potential in the medium term.
L&T Finance, established in 1994, is a prominent non-banking financial company in India.
The company, with over 1,600 rural group loans and microfinance meeting centers, along with more than 200 branches spanning urban and rural India, sees this collaboration as a significant step toward bridging the financial gap and promoting inclusive economic growth across the country.
Sachinn Joshi, Chief Financial Officer of L&T Finance Group, expressed the company’s commitment to social responsibility and outlined their strategy of diversifying funding sources.
Joshi 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.”
Joshi added, “For our company, this long-term loan forms a part of our continuous strategy of diversifying our funding sources. At L&T Finance, we recognize 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”.
The long-term loan from ADB aligns with L&T Finance’s vision of being a catalyst for empowering individuals, especially women, farmers, and MSMEs, to foster economic resilience.
This partnership contributes to ADB’s broader mission of achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, with a focus on eradicating extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 from the region. (ANI)
