Women in India are increasingly turning to business loans and financial credit to fuel their entrepreneurial ambitions. According to the latest report by Niti Aayog’s Women Entrepreneurship Platform (WEP), TransUnion CIBIL, and MicroSave Consulting (MSC), the number of women borrowers has surged in the past five years. This trend is particularly noticeable in northern and central states like Uttar Pradesh, Rajasthan, and Madhya Pradesh, where the number of active women borrowers has grown at a compounded annual growth rate (CAGR) of 22%.
Women’s Share in Business Loans Grows by 14%
From 2019 to 2024, women’s participation in business loans has risen by 14%, and their share in gold loans has increased by 6%. By December 2024, women accounted for 35% of all business borrowers in India. Notably, 60% of these borrowers belonged to small towns and rural areas, showcasing a remarkable financial empowerment shift beyond metropolitan regions.
Small-Town Women Leading in Credit Score Monitoring
The report emphasizes that women in smaller towns are more proactive in tracking their credit scores compared to their metropolitan counterparts. Statistics reveal that:
- 48% more women in small towns actively monitor their credit, compared to a 30% increase in metro areas.
- By December 2024, approximately 27 million women were actively reviewing their credit scores, reflecting a 42% year-on-year growth.
- The highest number of women actively tracking their creditworthiness were from Maharashtra, Tamil Nadu, Karnataka, Uttar Pradesh, and Telangana, making up 49% of all such women borrowers.
This shift indicates a growing financial literacy trend among women, enabling them to manage debt responsibly and access better loan opportunities.
Women Entrepreneurs: A Key to Job Creation
Encouraging women entrepreneurship can lead to significant employment generation. Niti Aayog’s Chief Economic Advisor and WEP’s Mission Director, Anna Roy, emphasized that fostering female entrepreneurship is a strategic step toward economic equality and job creation.
According to estimates:
- 15 to 17 million new jobs could be created by enhancing female entrepreneurship.
- Increased participation of women in the labor force would result in sustained economic growth.
Challenges: Barriers to Financial Access for Women
Despite the progress, several challenges continue to hinder equal financial access for women entrepreneurs. Niti Aayog CEO B.V.R. Subrahmanyam pointed out that while government initiatives aim to bridge the financial gap, many women still face obstacles such as:
- Limited access to business funding due to restrictive lending norms.
- Difficulties in securing collateral-free loans or finding guarantors.
- Poor banking experiences, including delays and bureaucratic hurdles.
To overcome these challenges, a collective effort from financial institutions, policymakers, and the private sector is essential.
The Role of Government Initiatives in Supporting Women Borrowers
The Indian government has launched multiple financial schemes to encourage women entrepreneurs and ensure their easy access to business credit. Some key initiatives include:
1. Mudra Yojana for Women
The Pradhan Mantri Mudra Yojana (PMMY) has been instrumental in providing collateral-free loans to women, especially for micro and small enterprises (MSEs). Under this scheme:
- Women entrepreneurs can avail loans under three categories: Shishu (up to ₹50,000), Kishore (₹50,000 – ₹5 lakh), and Tarun (₹5 lakh – ₹10 lakh).
- More than 70% of Mudra loans have been sanctioned to women borrowers.
2. Stand-Up India Scheme
This scheme facilitates bank loans between ₹10 lakh and ₹1 crore to women from Scheduled Castes (SC) and Scheduled Tribes (ST) to establish greenfield enterprises.
3. Mahila Coir Yojana
Targeted at rural women, this initiative provides training and subsidized loans to help them establish coir-based businesses.
4. Niti Aayog’s Women Entrepreneurship Platform (WEP)
WEP serves as a comprehensive support system, offering:
- Financial literacy programs.
- Access to loans and venture capital funding.
- Mentorship and networking opportunities for women entrepreneurs.
The Road Ahead: Strengthening Women’s Financial Inclusion
For India to sustain this positive trajectory in women’s financial inclusion, it is crucial to:
1. Strengthen Financial Literacy Programs
Empowering women with better financial knowledge will enable them to make informed credit decisions and improve their creditworthiness.
2. Expand Credit Access to Rural Women
- More women-centric loan products should be introduced, specifically for rural entrepreneurs.
- Simplifying loan application processes can help overcome bureaucratic barriers.
3. Encourage Digital Lending Platforms
With the rise of fintech solutions, digital lending can provide hassle-free, quick credit access to women entrepreneurs in remote areas.
4. Increase Awareness of Government Schemes
Many eligible women remain unaware of financial support programs available to them. A stronger focus on awareness campaigns can help bridge this gap.
