A $125 million agreement is signed by L&T Finance and ADB to assist financial needs in peri-urban and rural areas

24 Nov 2023 , 11:29 AM

On November 23, L&T Finance and the Asian Development Bank (ADB) inked a $125 million finance agreement to boost lending in rural and peri-urban areas, with a focus on women borrowers.

According to the press release, the money consists of an agreement to syndicate an additional $125 million co-financing from other development partners and a loan of up to $125 million from ADB.

In accordance to the statement, forty percent of the revenues would go toward helping women borrowers. The remaining funds will also be used to support MSMEs, farmers, and loans for the purchase of new two-wheeled vehicles.

The partnership with ADB, according to Sachinn Joshi, Group Chief Financial Officer of L&T Finance, is consistent with the business’s basic principles of social responsibility. ‘We think that our collaboration with ADB is a big step forward and will support our continued work to close the financial gap and advance equitable economic growth throughout the nation. This long-term loan is a component of our company’s ongoing plan to diversify its financial sources, the executive stated.

Communities in rural areas suffer major obstacles to financial services access, even in the face of consistent economic growth in the rural sector.

According to the release, over 70% of marginal farmers do not have a bank account, and 87% do not have access to loans.

‘The communities we serve are profoundly impacted by financial inclusion, as we at L&T Finance are aware of. Additionally, Joshi stated, ‘We aim to be a catalyst for individual empowerment, especially for women, farmers, and MSMEs, thus fostering economic resilience through our on-lending efforts in the underserved and lagging areas in India.

Two-wheeled vehicle loans, MSME loans, farm equipment loans, and microloans have all been recognized as market categories with strong development potential expected in the medium future.

Because the project concentrates on lending in rural and peri-urban areas of underdeveloped Indian states, it is strategically aligned with the objectives of the Ministry of Rural Development.

According to Suzanne Gaboury, Director General of the ADB’s Private Sector Operations Department, ‘Rural India contributes nearly half of the nation’s income, with 65 percent of the population working in agriculture.’ ADB is able to help small enterprises and individual livelihoods through this cooperation with L&T Finance, which has the potential to provide credit at scale, with a particular focus on reaching women borrowers.

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