ADB and L&T Finance Collaborate in USD 125 Million Deal to Boost Financial Access in Rural India

The Asian Development Bank (ADB) and L&T Finance have joined forces in a groundbreaking collaboration, signing a loan agreement worth USD 125 million. The primary objective of this partnership is to boost financial access for women, farmers, and micro, small, and medium-sized enterprises (MSMEs) in the rural and peri-urban areas of India.

This substantial funding package, comprising a USD 125 million loan from ADB and an agreement to syndicate an additional USD 125 million in cofinancing from other development partners, emphasizes the commitment to supporting crucial sectors in India's rural landscape.

An integral aspect of this initiative is the earmarking of at least 40 percent of the funds specifically for women borrowers. This acknowledges the unique challenges women face in accessing financial services.

Rural India, where 65 percent of the population is engaged in agriculture, plays a pivotal role in the nation's economic landscape, contributing nearly half of the national income. However, rural communities encounter significant barriers in accessing financial services. The collaboration 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.

Suzanne Gaboury, ADB's Director General for Private Sector Operations, emphasized the strategic focus on reaching women borrowers through this collaboration with L&T Finance. She stated, "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 aims 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 percent of marginal farmers lacking a bank account and 87 percent lacking access to credit. Women, in particular, face significant disparities, with only 14 percent 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, a prominent non-banking financial company established in 1994, 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."

He 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 and, through our on-lending activities in the underserved and lagging states in India, we aim to be a catalyst for empowering individuals, especially women, farmers, and MSMEs, thus fostering 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.