ADB Signs $125 Million Loan with L&T Finance to Support Access to Finance for Women, Farmers, and MSMEs in India – EQ
In Short : The loan will help L&T Finance expand its lending to these underserved sectors, including providing financing for agricultural activities, small businesses, and women entrepreneurs. This will in turn help promote inclusive and sustainable economic growth in the country.
In Detail : MANILA, PHILIPPINES : The Asian Development Bank (ADB) has signed a $125 million loan agreement with L&T Finance to support financing in rural and peri-urban areas in India, particularly for women borrowers.
The funding comprises a loan of up to $125 million from ADB, and an agreement to syndicate additional $125 million cofinancing from other development partners. At least 40% of the proceeds will be allocated for women borrowers, while the rest will support farmers, micro, small, and medium-sized enterprises (MSMEs), as well as loans to purchase new two-wheeled vehicles.
“Rural India, with 65% of the country’s population engaged in agriculture, contributes almost half of the national income,” said ADB Director General for Private Sector Operations Suzanne Gaboury. “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.”
Despite steady rural economic growth, rural communities face significant barriers accessing financial services. About 70% of marginal farmers do not have a bank account, and 87% lack access to credit. Women are disproportionality effected, with only 14% having access to credit.
Microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans have been identified as segments with strong growth potential anticipated in the medium term. By focusing on lending in rural and peri-urban areas of lagging states in India, the project is strategically aligned with the goals of India’s Ministry of Rural Development.
“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,” said L&T Finance Group Chief Financial Officer Sachinn Joshi. “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.”
Founded in 1994, L&T Finance is one of India’s leading non-banking financial companies with over 1,600 rural group loans and microfinance meeting centers and more than 200 branches spread across urban and rural India. As of 30 September, the retail portfolio mix of the company stands at 88% of the total loan book.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
