The Asian Development Bank (ADB) has signed a USD 200 million loan with Axis Bank to extend finance to low-income smallholder farmers.

'The agricultural sector plays a major role in livelihoods and the economy in India,' said Todd Freeland, director general of ADB's Private Sector Operations Department. 'This new financing will provide Axis long-term capital that can be utilized to provide affordable loans to farmers to improve their productivity, income and access to growing urban markets.'

Axis is the third largest private bank in India, with long-established rural networks. It will use the funds to provide loans to smallholder farmers for working capital and long-term investments to improve their market connectivity and crop yields.

The agriculture sector supports over two-thirds of India's population but low crop yields and output are major areas of concern. Improving agricultural productivity at the farm level, removing obstacles to market access for farmers and providing investment capital will support growth and rural poverty alleviation.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members-48 from the region.  In 2014, ADB assistance totalled USD 22.9 billion, including cofinancing of USD 9.2 billion.

Shares of the bank declined Rs 3.3, or 0.59%, to trade at Rs 552.45. The total volume of shares traded was 15,554 at the BSE (9.16 a.m., Tuesday).