Smallholder Agri-Finance – India

Key Facts

• Client: MFI Programme (multiple borrowers)
• Term: 24-36 month loans to 5 Micro Finance Institutions
• Guarantee instrument: Pari Passu
• Guarantee exposure: USD 25 Mln (50% of total loan value)
• Effective date: October 2023

Deal Summary

AGRI3 is supporting the mobilisation of USD 50 Mln (INR equivalent) from HSBC India for a portfolio of Micro Finance Institutions (MFIs) across India that provide credit to smallholder farmers and agri-allied households in rural areas, with a strong focus on women borrowers.

India’s agricultural sector supports nearly 43% of the workforce yet smallholder farmers (particularly women) face persistent barriers to formal credit. By working through MFIs, AGRI3 and HSBC are able to channel finance to marginalised farming communities at scale, in a market where direct on-lending to individual smallholders is not a viable route.

Impact Rationale

The facility supports the transition to more sustainable and climate-smart agriculture (CSA) by enabling MFIs to develop new loan products and services targeting improved environmental practices. A dedicated Technical Assistance (TA) programme will assess CSA opportunities across MFI portfolios and work with institutions to develop potential standardised solutions, from input-efficiency products to climate-resilience training.

The social impact of this programme is central to its design. The MFIs selected for inclusion primarily serve economically marginalised communities, with the majority of borrowers being rural women. By expanding access to formal credit, the programme supports economic resilience, income diversification, and improved livelihoods for farmers who have historically been excluded from the banking system.

AGRI3 is providing TA support to help MFIs assess their agri and agri-allied portfolios, identify sustainable agriculture opportunities, and develop the internal capacity to offer CSA-linked products. KPIs including area under sustainable management, GHG reductions, and number of farmers trained will be defined through the TA process.

Impact Targets

Protection of natural ecosystem (direct and indirect)

Sustainable agriculture

Improved rural livelihoods