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L&T Finance to raise $550 mn funding led by IFC for farm lending

Dinanath Dubhashi

Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings

L&T Finance, a wholly-owned subsidiary of Indian NBFC L&T Finance Holdings, said that it will be raising about USD 550 million (INR 3,795 crore) funding led by World Bank member IFC.  BNP Paribas, Citibank, and DBS Bank Limited will also participate in the funding round.

L&T Finance said that it has raised a first tranche USD 275 million (INR 1895 crore), of which about IFC has contributed about USD 125 million (INR 862 crore).  IFC’s priority lending is into sectors that promote modern and climate-smart farming practices.

The funds will be used to expand the company’s farm equipment finance book by extending loans to farmers for buying equipment and modernizing farming.

“Our business strategy is actively aligned to the needs of our nation. NBFCs have a crucial role to play in financial inclusion in India. Lending scientifically and methodically to customers who do not have access to last mile credit is the next growth opportunity for NBFCs. We are investing in technology, and data and analytics to lead this change,” said Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings.

According to the National Bank for Agriculture and Rural Development, there is a formal financing gap of $80 billion in agricultural financing.

Specialized NBFCs, such as L&T Finance, with their widespread reach and tailored solutions, serve as an important source of credit to small farmers.

“Addressing the large rural finance gap and supporting modernization of agriculture are key components in sustaining India’s growth story and meeting the government’s commitment to double farmers’ income by 2022. This project will promote inclusiveness in accessing finance,” said Hemalata Mahalingam, Manager, Financial Institutions Group, IFC South Asia. “

IFC had earlier invested $100 million (INR 690 crore) of debt in L&T Infrastructure Finance for on-lending to developers of solar power projects and $75 million (INR 517 crore) of debt in L&T Housing Finance for on-lending to developers of affordable housing units.

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