WOMENT’S ACCESS TO FINANCE: A Story Still Incomplete

# Male entrepreneurs raised $10.8 billion for tech startups in 2004; in contrast, women-founded firms attracted only $1 billion.

# Residential transactions by women buyers rose 14 per cent in 2024, while property purchase by men rose 11 per cent.

# Even though about 20 per cent of financial sector employees are women, in equity dealing rooms, the gender ratio is 20:1 – one woman dealer for every 20 men.

These, and many more reports, appeared in financial papers last Saturday, as we celebrated the International Women’s Day.

At the Republic Day parade on January 26 this year, the rural development ministry's tableau on the Lakhpati Didi drew much attention. It showcased women's economic empowerment through entrepreneurship focusing on the Lakhpati Didi scheme (launched in 2023), which aims to ensure a minimum income of Rs 1 lakh to members of self-help groups (SHGs).

According to the ministry, at least 11.5 million women SHG members have become 'Lakhpati Didis'. So far, over 100 million rural women have joined close to 99 million SHGs. Around 300 of them, the 'Lakhpati Didis', attended the R-Day parade as special guests.

The government has set a target of “making three crore Lakhpati Didis in the next five years.

This is significant when we look at the role of women in entrepreneurship in India. NITI Aayog data show women account for just 13.76 per cent of entrepreneurs, contributing 17 per cent to the GDP, well below the global average of 37 per cent. Going by International Labour Organisation (ILO) statistics, in 2022, just 19.2 per cent of Indian women participated in the workforce, highlighting a significant employability gap.

Finally, India ranks 57th out of 65 counties in female entrepreneurship progress and success.?

Why do we have such a low ranking? Only 20 per cent of India’s 61 million micro, small and medium enterprises (MSMEs) are led by women, almost half of which operate in rural areas. Women lead 5.26 per cent of small and 2.67 per cent of medium enterprises.

Efforts are being made to change this. Going beyond SHGs, the traditional platform for women borrowers, efforts are on to create new gender-specific avenues to tap.

The Economic Survey 2023-24 (FY24) highlights the increasing participation of women in India’s progress with access to education, skill development and other initiatives for women’s empowerment going up.

With rural India driving the trend, the female labour force participation rate (LFPR) rose to 37 per cent in FY23 from 23.3 per cent in FY18. The Pradhan Mantri Jan Dhan Yojana (PMJDY) has facilitated the opening of 545.8 million bank accounts, of which 303.7 million account holders are women (as of January 15, 2025).

According to the survey, around 68 per cent of the loans under Pradhan Mantri Mudra Yojana (PMMY) have been sanctioned to women entrepreneurs, and 77.7 per cent of the beneficiaries under “Stand Up India” are women (as of May 2024).

Stand Up India focuses on providing financial assistance to women as well as entrepreneurs from Scheduled Castes and Scheduled Tribes to establish new businesses through bank loans, while "Start Up India" is a government initiative for promoting and supporting innovative, technology-driven new businesses.

What kind of access do women have to formal finance sources? Let’s look at the Mudra (Micro Units Development and Refinance Agency) scheme, launched to provide financial support to micro and small enterprises. It operates under PMMY and aims to promote entrepreneurship, particularly among marginalised sections, by offering collateral-free loans through banks, non-banking financial companies (NBFCs) and microfinance institutions (MFIs).

There are four?types of Mudra loans based on the funding needs of enterprises: Shishu (up to Rs 50,000 for startups and early-stage businesses); Kishor (Rs 50,000 to Rs 5 lakh for growing businesses seeking expansion); Tarun (Rs 5 lakh to Rs 10 lakh for well-established businesses needing higher capital); and Tarun Plus (Rs 10 lakh to Rs 20 lakh for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category).

Since its inception in 2015 till FY24, of the 478 million Mudra accounts, 324 million are held by women. However, though they hold 67.92 per cent of the accounts, the amount sanctioned to women is 44.46 per cent, and the amount disbursed is 44.07 per cent. Although more women have access to Mudra loans, the per capita credit sanctioned to them is comparatively lower?than what men borrowers have received.

It's clear that women-led enterprises are still facing challenges in securing the credit they need for business expansion and growth.

Let’s now look at the micro data of Mudra loans.

If we assume that MFIs have only women customers, then in FY24, 23.96 per cent of accounts were held by women. Their share has declined from 25.01 per cent in FY23 and 25.98 per cent in FY22.

Now, look at the year-wise trend of on-boarding women as account holders and the money disbursed to them by four sets of financial intermediaries in the past few years, keeping FY21 as the base.

Public sector banks (PSBs) recorded a drop of 1.9 million women?account holders in FY22, but added 1.7 million in FY23 and 1.4 million in FY24. Private banks added 4.5 million women account holders in FY22, but have since witnessed a decline: 1.6 million in FY23 and 1.1 million in FY24. NBFCs witnessed a drop of 100,000 in FY22, but in FY23, the number of women borrowers rose by 1.6 million, and in FY24, it increased by 400,000. Small finance banks (SFBs), meanwhile, have been showing a steady decline in new women borrowers under the Mudra scheme. From 1.8 million in FY22, the number dropped to 800,000 in FY23 and 700,000 in FY24.

Now, let’s look at the trend in loans disbursed to women.?

Incremental disbursement by PSBs dropped by Rs 4,000 crore in?FY22;?but in FY23, it rose by Rs 41,000 crore before dropping Rs 21,000 crore in FY24. In contrast to this volatile graph, new loans by private banks have been on the rise: From Rs 24,000 crore for two consecutive years (FY22 and FY23) to Rs 34,000 crore in FY24. SFBs, meanwhile, are showing a gradual decline – from Rs 10,000 crore in FY22 to Rs 7,000 crore in FY 24. For MFIs, meanwhile, the data reflects volatility – rising from Rs 2,000 crore in FY22 to Rs 18,000 crore in FY23 before dropping to Rs 10,000 crore in FY24.

Efforts have been on to serve women entrepreneurs, but we still have a long way to go. A decade ago, India experimented with the Bharatiya Mahila Bank – dedicated to women customers. It failed. At least two cooperative organisations are run exclusively by women — the Ahmedabad-based Shri Mahila Sewa Sahakari Bank Ltd and Mann Deshi Mahila Sahakari Bank Ltd — but both have a limited geographical presence.

Nowhere in the world a bank exclusively set up for women has succeeded. Pakistan’s experiment – First Women Bank Ltd – commenced operations in December 1989. It gives loans to those companies where women have at least 50 per cent shareholding; or where women constitute at least 40 per cent of the total employees; or those that have a woman chief executive officer (CEO). Tanzania Women’s Bank is another example. Set up in 2007, it focuses on low-income earners, small businesses, and small and medium enterprises. There is yet another global example of a special vehicle for women — Women’s World Banking Ghana Savings and Loans Co Ltd.

There have been a few gender-centric initiatives by?Indian?banks to bridge the gap. One of them is Jan Dhan Plus, rolled out in 2019 by Bank of Baroda and Women’s World Banking (WWB), a global nonprofit that helps low-income women access financial resources, to encourage low-income women to save regularly in their PMJDY accounts. At least two other PSBs, Union Bank of India and Indian Bank, offer this. There could be more that I am not aware of.

The National Bank for Agriculture and Rural Development (Nabard) and WWB are looking to offer the Jan Dhan Plus scheme through the chain of regional rural banks. WWB is also developing a gender-intentionality scorecard and dashboard to improve service delivery to women.?

If India wants to be recognised as a developed country by 2047, narrowing the gender gap in the labour market is as important as women’s access to finance. We needed it yesterday.

Post script: According to a recent report by Niti Aayog and credit information firm TransUnion Cibil, the number of women borrowers in retail credit has increased at a compounded annual growth rate of 22 per cent in five years, between 2019 and 2024. Let’s hope the trend?gathers momentum.

This column first appeared in Business Standard

The writer, a Consulting Editor of Business Standard, is a Senior Adviser, Jana Small Finance Bank.

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