L&T Finance signed a financing pact with the Asian Development Bank (ADB) on November 23 for $125 million to support financing in rural and peri-urban areas, particularly for women borrowers.
The funding includes a loan of up to $125 million from ADB, and an agreement to syndicate an additional $125 million co-financing from other development partners, according to the press release.
Forty percent of the proceeds are allocated for women borrowers, while the rest will support farmers, and MSMEs, as well as loans to purchase new two-wheeled vehicles, the release stated.
Sachinn Joshi, Group Chief Financial Officer, L&T Finance said that the collaboration with ADB aligns with the company's 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. For our company, this long-term loan forms a part of our continuous strategy of diversifying our funding sources," he said.
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Despite steady rural economic growth, communities in rural areas face significant barriers to access financial services.
About 70 percent of marginal farmers do not have a bank account and 87 percent lack access to credit, according to the release.
"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,” Joshi added.
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.
The project is strategically aligned with the goals of the Ministry of Rural Development as it focuses on lending in rural and peri-urban areas of lagging Indian states.
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Suzanne Gaboury, Director General, Private Sector Operations Department, ADB said, “Rural India, with 65 percent 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.”
L&T Finance Holdings on October 20 reported a 46.42 percent rise in its net profit to Rs 595.11 crore in the second quarter of the current financial year.
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