ADB’s USD 125 million loan to L&T Finance aims at empowering women, farmers and MSMEs in India
ADB’s USD 125 million loan to L&T Finance aims at empowering women, farmers and MSMEs in India
The Asian Development Bank (ADB) has joined forces with L&T Finance in a collaborative effort to enhance financial access for women, farmers, and micro, small, and medium-sized enterprises (MSMEs) in rural and peri-urban areas of India. The partnership involves a USD 125 million loan agreement from ADB and a commitment to syndicate an additional USD 125 million in co-financing from other development partners.
The funding package is a testament to the commitment to support sectors crucial to India’s rural landscape. It aims to address the financial needs of underserved communities and promote inclusive economic growth. The collaboration focuses on empowering women, supporting farmers, and fostering the growth of MSMEs, contributing to the overall development of rural and peri-urban areas.
This initiative recognizes the importance of providing financial services to segments that are often marginalized or face barriers in accessing formal banking channels. By partnering with L&T Finance, the ADB aims to leverage the expertise and reach of a financial institution to create meaningful impact on the ground.
The funding will be deployed strategically to facilitate financial inclusion, boost entrepreneurship, and create opportunities for economic advancement in rural and peri-urban regions. The syndication of additional co-financing reflects a collaborative approach involving multiple stakeholders dedicated to addressing the financial inclusion challenges prevalent in these areas.
The collaboration aligns with broader efforts to promote sustainable development, reduce inequality, and ensure that economic benefits reach all sections of society. By focusing on key segments such as women, farmers, and MSMEs, the initiative aims to contribute to building a more inclusive and resilient economy, fostering sustainable development in India’s rural landscape.
A significant aspect of this collaborative initiative is the earmarking of at least 40 per cent of the proceeds specifically for women borrowers. This targeted allocation acknowledges and addresses the unique challenges that women often encounter in accessing financial services. By directing a substantial portion of the funding towards women, the collaboration aims to empower and uplift this segment of the population, fostering economic independence and resilience.
The focus on women borrowers aligns with global efforts to promote gender equality and women’s empowerment. Access to financial resources is a key enabler for women to engage in economic activities, start businesses, and contribute meaningfully to their communities. By dedicating a substantial portion of the funds to women-centric initiatives, the collaborative effort between ADB and L&T Finance aims to create a positive impact on gender dynamics in rural and peri-urban areas.
This targeted approach recognizes the instrumental role that women play in driving economic development and building stronger communities. The initiative not only addresses financial inclusion challenges but also contributes to broader social objectives, emphasizing the importance of empowering women as a catalyst for positive change. Through this strategic allocation, the collaboration seeks to create a more inclusive and equitable financial landscape that benefits women, farmers, and MSMEs in rural and peri-urban India.
Rural India, home to 65 per cent of the population engaged in agriculture, holds a pivotal position in the nation’s economic landscape, contributing almost half of the national income. Despite this significant contribution, rural communities often face substantial challenges in accessing essential financial services. The collaboration between the Asian Development Bank (ADB) and L&T Finance seeks to bridge this gap by facilitating the provision of credit at scale.
This strategic partnership is designed to support individual livelihoods and catalyze the growth of small businesses in rural and peri-urban areas. By extending financial access to farmers, women, and micro, small, and medium-sized enterprises (MSMEs), the initiative aims to unleash economic potential and enhance financial inclusion in these regions. The infusion of funds, along with a targeted focus on women borrowers, underscores the commitment to empowering diverse segments of the population.
The agricultural sector, which forms the backbone of rural economies, stands to benefit significantly from increased financial access. Farmers, who constitute a substantial portion of the rural population, can leverage credit to invest in modern farming practices, purchase equipment, and improve overall productivity. Similarly, MSMEs, often the engines of local economies, can access the capital needed for expansion and sustainability.
By directing attention and resources to rural and peri-urban areas, this collaboration aligns with broader efforts to promote inclusive and sustainable development. The emphasis on financial inclusion for women further recognizes the critical role they play in rural economies and underscores the commitment to gender-responsive strategies. Ultimately, the partnership aims to contribute to the holistic development of rural India, fostering economic resilience and creating pathways for prosperity in these communities.
Suzanne Gaboury, the Director General for Private Sector Operations at the Asian Development Bank (ADB), emphasized the strategic importance of reaching women borrowers through the collaborative effort with L&T Finance. In acknowledging the substantial contribution of rural India, where 65 per cent of the population is engaged in agriculture, Gaboury highlighted the initiative’s potential to support individual livelihoods and small businesses.
The partnership with L&T Finance, renowned for its capacity to provide credit at scale, allows ADB to address financial inclusion challenges in rural and peri-urban areas. The specific focus on reaching women borrowers aligns with broader gender-inclusive strategies, recognizing the pivotal role women play in rural economies. By extending financial services to diverse segments of the population, the initiative not only contributes to economic empowerment but also supports the goals outlined by India’s Ministry of Rural Development, particularly in underserved and lagging states.
Financial services in rural areas of India have been limited, with a substantial percentage of marginal farmers lacking bank accounts and credit access. Women, in particular, face significant disparities, with only a small fraction having access to credit. Recognizing these challenges, the ADB-L&T Finance partnership aims to address these gaps by identifying segments with strong growth potential, including microloans, farm equipment loans, two-wheeled vehicle loans, and MSME loans.
L&T Finance, established in 1994, brings its expertise as a prominent non-banking financial company in India to this collaboration. The initiative seeks to enhance financial access for women, farmers, and micro, small, and medium-sized enterprises (MSMEs) in rural and peri-urban areas, contributing to economic development and empowerment in these regions.
L&T Finance, with its extensive network of over 1,600 rural group loans and microfinance meeting centers, along with more than 200 branches covering urban and rural India, considers this collaboration as a crucial initiative to address the financial gap and foster inclusive economic growth throughout the country.
Sachinn Joshi, Chief Financial Officer of L&T Finance Group, emphasized the company’s commitment to social responsibility and highlighted their strategic approach of diversifying funding sources to support rural communities and small businesses. The partnership aligns with their goal of contributing to the economic development of rural India by providing essential financial services to underserved populations.
Sachinn Joshi, CFO of L&T Finance Group, expressed that the collaboration with ADB resonates with their core values of social responsibility. He sees this partnership as a significant stride in their ongoing efforts to narrow the financial gap and stimulate inclusive economic growth across India. Joshi highlighted that the long-term loan from ADB is part of their strategy to diversify funding sources, emphasizing their commitment to being a catalyst for empowering individuals, especially women, farmers, and MSMEs, to foster economic resilience.
This collaboration not only supports L&T Finance’s vision but also contributes to ADB’s broader mission of achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, with a specific focus on eradicating extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 from the region, and this partnership reinforces their commitment to addressing financial inclusion challenges and promoting economic development in rural areas of India.
