61 per cent of women-owned micro businesses in India remain unregistered with formalisation being a key barrier to the support of such enterprises, said a report on Thursday by global consulting firm MicroSave Consulting (MSC) in collaboration with microfinance association Sa-Dhan and supported by JPMorgan Chase. Moreover, sustainability is another key challenge faced by women micro businesses as nearly half of them (49 per cent) said they would not be able to survive at all in case of a sudden loss of revenue.
The research, covering six regions—Delhi-NCR, Gujarat, Maharashtra, Telangana, Karnataka, and Tamil Nadu— collected data through 1,460 computer-assisted personal interviews, key informant interviews with financial institutions and support organizations, and desk research.
The report ‘Decoding the Financial Health of Women-Owned Micro-Businesses (wMB) in India’ highlighted the financial challenges faced by women entrepreneurs.
Autonomy was also revealed to be another critical issue for women micro units as about 44.3 per cent of women entrepreneurs said they rely on their spouses or other family members to support their businesses, which reflected a significant dependence on external help.
Further, a majority of these businesses do not generate employment. The report said approximately 55 per cent of these businesses do not employ any staff and operate as solo ventures, which limits their contribution to job creation and the broader economy.
Among other key deterrents to the growth of women-owned micro enterprises highlighted in the report were 60 per cent of respondents didn’t maintain any written records for their operations; 51 per cent who didn’t maintain the records reported that they struggled to pay EMIs or loan dues, 68 per cent had no separate bank account for their business, 69 per cent said they have not availed any formal loan, indicating potential barrier to accessing financial services; and over 45 per cent said they don’t maintain any emergency funds for business at all.
The study defined women-owned microbusinesses as those with annual revenues between Rs 1.5 lakh and Rs 9 lakh, employing three individuals.
Another study in September this year by Crisil and DBS Bank India which included survey of 400 self-employed women highlighted that bank loans were the preferred choice of only 21 per cent of respondents looking to fund their business.
On the other hand, as many as 65 per cent of self-employed women said they depend on personal savings or financial assistance from family or friends to finance their business.
To boost credit access for women-owned micro and small enterprises, the government last month had enhanced the loan guarantee coverage under the CGTMSE scheme to 90 per cent.
MSME Minister Jitan Ram Manjhi had said that 27 lakh women-owned MSEs are likely to benefit from this initiative.