On March 23, 2023, the Japan International Cooperation Agency (JICA) signed a loan agreement with IndusInd Bank Limited, a financial institution in the Republic of India, for up to 13 billion yen to improve access to finance for farmers and to promote agricultural productivity. The funds from this loan will be used to finance agricultural sector projects. This project will be implemented as a co-financing with Citibank N.A.
The agricultural sector is an important sector in the Indian economy, accounting for about 17% of GDP and 50% of employment. However, the income level of farmers remains low, about 50% of that of urban workers. In order to improve farmers’ incomes, improved access to finance is needed at an early stage to further promote capital investment in the agricultural sector in order to increase agricultural productivity.
In recent years, the Government of India and the Central Bank of India have been promoting lending to the agricultural sector under the Priority Sector Lending* initiative. This project will support the efforts of IndusIndia Bank, one of the country’s leading private sector financial institutions, which is strengthening its lending to the agricultural sector by leveraging its strength of having many offices in rural areas. The funds will be provided to farmers through the bank and will be used to purchase agricultural equipment, high quality seeds, fertilizers, and other necessary items, as well as for capital investment.
By improving access to finance for India’s agricultural sector, this loan will contribute to correcting disparities in the country, and will contribute to SDG Goals 1 (End poverty), 8 (Job satisfaction and economic growth), and 17 (Achieve the goals through partnership). JICA will continue to support access to finance for the agricultural sector in India and other countries around the world.
(Note: Reserve Bank of India, “Master Circular-Priority Sector Lending-Targets and Classification. The priority sectors specified are (1) agriculture, (2) MSME, (3) export credit, (4) education, (5) housing, (6) social infrastructure, (7) renewable energy, and (8) others. The agriculture sector is required to allocate 18% of its loans.
© Source JICA
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