Empowering Economic Growth: L&T Finance Collaboration with ADB

L&T Finance has recently secured a financing agreement with the Asian Development Bank (ADB) for a substantial sum of $125 million. This funding is intended to facilitate financial assistance in rural and peri-urban areas in India, with a particular emphasis on female borrowers.

The financial support from ADB consists of a loan of up to $125 million, along with a commitment to coordinate an additional $125 million in co-financing from various other development partners. Notably, a minimum of 40% of the funds will be allocated to female borrowers, while the remaining portion will be utilized to support farmers, Micro, Small, and Medium-sized Enterprises (MSMEs), and loans for the acquisition of new two-wheeled vehicles.

Sachinn Joshi, Group Chief Financial Officer at L&T Finance, underscored the significance of the collaboration with ADB, emphasizing the alignment of this partnership with the company’s core values of social responsibility. He characterized this collaboration as a pivotal step that will reinforce their ongoing endeavors to mitigate the financial divide and foster inclusive economic growth on a national scale. He further elaborated that the long-term loan secured by L&T Finance is integral to their sustained efforts to diversify their funding sources and underscored the profound impact of financial inclusion on the communities they serve.

Indubitably, despite the sustained economic growth in rural India, accessibility to financial services remains a formidable challenge for rural communities. An astounding 70% of marginal farmers lack bank accounts, and a staggering 87% are devoid of access to credit. Distressingly, women are disproportionately affected, with merely 14% having access to credit.

Recognized as segments with substantial growth potential in the medium term, microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans hold pivotal significance. The project strategically aligns with the objectives of India’s Ministry of Rural Development by concentrating on lending in underdeveloped rural and peri-urban areas in the country.

Suzanne Gaboury, Director General of the Private Sector Operations Department at ADB, voiced her perspective, noting that rural India, with 65% of the country’s population engaged in agriculture, contributes almost half of the national income. The partnership with L&T Finance, she contended, holds immense potential to facilitate credit at scale, thereby enabling ADB to bolster individual livelihoods and small businesses, with a specific focus on reaching female borrowers.