The Hindu Business Line : L&T Finance aims to cover 5 lakh micro borrowers

L&T Finance’s micro finance activity, which began in August 2008, has spread to four States covering 2.5 lakh borrowers with total disbursements of Rs 277 crore.

Mr G.K. Shettigar, Assistant Vice-President of L&T Finance, told reporters here on Wednesday that the target for the current fiscal was to cover five lakh borrowers with a disbursement plan of Rs 500 crore.

There is no NPA in micro-finance, he said and added that some other rural lending schemes of the company, including those for tractors and vehicles had NPAs, “though at manageable levels.”

Currently, L&T Finance is present in Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra with micro-finance schemes. It has plans to extend the same to Gujarat, Madhya Pradesh, Chhattisgarh and Orissa.

Interest rate

The company, which intends to meet micro-finance needs in the non-agriculture rural sector, lends at an average rate of 24 per cent in the segment. “This is much lower than the rates charged by money lenders,” Mr Shettigarh said.

In case of micro finance, L&T goes through layers of surveys and assessment before disbursal. “In case of other rural credit, including those for tractors and vehicles, we generally select borrowers from areas which produce multi-crops so that one crop failure does not affect the ability of the borrowers to pay back,” he added.

Within rural finance, particularly for micro-finance, L&T finance follows the direct lending through joint liability groups. Other products in the rural segment include financing of farm equipment, agricultural implements such as harvesters as well as purchase of rural transport vehicles such as three-wheelers and utility vehicles.

L&T Finance plans to slot itself as a game changer in the rural finance in line with the Government’s objective of financial inclusion.