Credit and Finance for MSMEs: Lack of access to collateral and financial feasibility of the business deprives women of access to financial services. To overcome this, the disaggregation of women-specific data for efficient analysis will help strengthen loan appraisal and disbursal.
Credit and Finance for MSMEs: Women-specific credit assessment mechanisms, partnerships with government or private institutions, providing a platform via e-commerce startups and handicraft associations to sell products are some of the suggestions made by SIDBI to financially empower women and boost women entrepreneurship to boost the microfinance sector. According to a report by SIDBI and PwC on India’s microfinance market, out of 64 million ‘unique live borrowers’ in FY19, women borrowers make up for around 85 per cent share. “Women-driven entrepreneurial enterprises will not only ensure regular repayments for microfinance lenders but will also establish a strong influencer channel in the form of women entrepreneurs for higher credit penetration,” the report said.
Lack of access to collateral and financial feasibility of the business deprives women of access to financial services. To overcome this, the disaggregation of women-specific data for efficient analysis will help strengthen loan appraisal and disbursal processes, the report said. Importantly, India stood at 70th rank out of 77 countries part of the Female Entrepreneurship Index while according to the National Sample Survey, around 14 per cent of the business firms are run by women in India. This suggested the enormity of the gender gap in entrepreneurship in India. “Success of microlenders depends largely on financially supporting women entrepreneurs who are major contributors to the sectoral and overall economic growth,” the report titled Vision of Microfinance in India said.
To solve the challenge of boosting women entrepreneurship and borrowing from microlenders, SIDBI suggested new partnerships with government or private institutions for organising educational sessions on enterprise, personal finance and business management to help women in effectively using credit. Moreover, microlenders can leverage partnerships with e-commerce startups and handicraft associations to provide a platform for rural entrepreneurs to sell their products. “Additionally, skill development training programmes can also provide practical training to women, helping them to find become employment in fields such as technology, beauty parlour services, tailoring, farming and animal husbandry.”
Despite the presence of multiple players including banks, NBFCs, NBFC-MFI, MFIs, small finance banks in India’s microfinance market with a significant portion of its population in the low-income band, the opportunity for the microfinance sector remains large. While government schemes and financial institutions have better access to microcredit for nearly 67 per cent of the Indian population living in rural areas, “16 the significant geographic concentration of MFIs within a few districts of the country (34% of the districts with microfinance presence contribute 80% of the portfolio) indicates the potential for achieving higher microfinance penetration,” according to SIDBI.