Reserve Bank of India (RBI) Deputy Governor Swaminathan J has called for bridging the gender gap in the MSME sector as one of the key steps in enabling banking and financial services to reach the remotest parts of the country. Swaminathan was speaking on ‘Ensuring Last Mile Connectivity of Banking Service’ on Wednesday at a conference of lead district managers and district development managers in Karnataka’s Hubballi.
The deputy governor said MSMEs are crucial to India realising its demographic dividend and one of the key requirements in this regard is increasing the female labour participation rate. “Various studies have shown that businesses with at least one women founder have a more inclusive work culture, employ more women than men and generate more revenue,” he said.
However, less than 20 per cent of MSMEs are owned by women and women entrepreneurs often encounter major hurdles, such as limited access to funding, societal barriers, and challenges in obtaining affordable finance, the deputy governor added.
It is therefore crucial to bridge the gender gap, Swaminathan said.
He suggested addressing this at the district level by offering support to women-led enterprises through government-sponsored programmes and tailored banking schemes for women-owned businesses.
Additionally, he called for efforts to raise awareness among potential women entrepreneurs about these opportunities and provide them with necessary guidance and support.
Swaminathan also touched upon the need for “significant work” required especially with regard to MSMEs for improving credit access even though credit delivery to priority sectors has progressed over time.
“Similarly, nearly half of Self-Help Groups (SHGs) are yet to be linked to formal credit, and a large proportion of small and marginal farmers still lack access to bank financing. Therefore, we must factor in the credit requirements of these segments in PLPs as well as in block and district-level credit strategies,” he said.
Earlier this month, RBI’s Deputy Governor Michael Debabrata Patra at a CII event had noted that out of around $1,955 billion of overall MSME finance demand in the country, only $289 billion is fulfilled by formal lenders.