Credit and Finance for MSMEs: There are about 15 million women-owned MSMEs in India that face challenges such as inadequate access to capital, technology and information, and infrastructure gaps, according to the IFC-Intellecap report.
Credit and Finance for MSMEs: The estimated credit demand by women-owned very small businesses (WVSEs) in the country is worth Rs 83,600 crore, said a report by International Finance Corporation (IFC) and Intellecap – the advisory arm of impact investment firm Aavishkaar Group on Tuesday highlighting the need for strong support from financial institutions. Launched on the occasion of International Women’s Day, the report said there are about 15 million women-owned MSMEs in India that face challenges such as inadequate access to capital, technology and information, and infrastructure gaps. Moreover, “contrary to popular perception, over 70 per cent of them are manufacturing enterprises, many of them home-based,” the report added.
Particularly with respect to lending, this segment of women entrepreneurs, who often overcome biases from within the family and the business community, witness fractional treatment, according to the report. It further noted that financial institutions have traditionally catered to men-owned enterprises. This approach limits the understanding of the operating contexts of women-owned businesses and their socio-cultural constraints. “The pandemic exacerbated existing inequalities faced by India’s women entrepreneurs,” said Wendy Werner, India Country Head at IFC in a statement.
Qamar Saleem, Regional Manager Asia & Pacific, Financial Institutions Group at IFC had last October at a virtual event said that there is a $158 billion financing opportunity for financial institutions to tap in lending to the overall women MSME segment. “They (women MSMEs) are actually a better risk profile. So, there is a clear business case for financial institutions to consider this as a market opportunity. They are concentrated in the informal space but we are also looking beyond informal — into micro enterprises,” Saleem had said.
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Even as the government has been urging banks to support women entrepreneurs, there aren’t enough central schemes dedicated to women MSMEs. Nonetheless, the government had launched the Stand-Up India scheme back in April 2016 for banks to support women and SC/ST borrowers for setting up a greenfield enterprise. The scheme reported 29 per cent growth in 2021 in the number of loans sanctioned and the amount involved — indicating growth in credit requirement for setting up greenfield enterprises despite the second wave of the pandemic. From 98,454 loan applications amounting to Rs 22,136.21 sanctioned crore as of December 15, 2020, the applications jumped to 1,27,440 worth Rs 28,700.36 crore as of December 26, 2021, data from the scheme’s portal had showed.