From Borrowers to Builders: Women’s Role in India’s Financial Growth Story

Syllabus: Women

Source:  Niti Aayog

Context: NITI Aayog launched the report “From Borrowers to Builders: Women’s Role in India’s Financial Growth Story” highlighting increased financial participation of women.

• The report, published by TransUnion CIBIL, Women Entrepreneurship Platform (WEP), and MicroSave Consulting (MSC), shows a 42% rise in women monitoring their credit as of December 2024.

About Findings on Women and Financial Growth:

Increased Credit Participation:

• Women borrowers tripled between 2019 and 2024.
• 60% of women borrowers are from semi-urban and rural areas.
• Women’s share in business loans increased by 14%, and in gold loans by 6% since 2019.

Rise in Credit Monitoring & Awareness:

• 27 million women monitored their credit in 2024, a 42% increase from 2023.
• More women in non-metro regions (48%) are actively monitoring credit than in metro areas (30%).
• 62% of self-monitoring women fall into prime or above credit bands, improving credit health.

Regional Credit Participation:

• Southern states lead in financial inclusion, with Tamil Nadu, Karnataka, and Telangana having the highest women borrowers.
• Northern & central states (UP, Rajasthan, MP) saw the fastest growth in live women borrowers in the past five years.

Success of Financial Inclusion for Women:

• Women Entrepreneurship Platform (WEP): Provides mentorship, market access, and financial literacy.
• Financing Women Collaborative (FWC): Promotes gender-intelligent financial products and public-private partnerships.
• Pradhan Mantri Mudra Yojana (PMMY): ₹2.22 lakh crore in loans disbursed to 4.24 crore women entrepreneurs in FY 2023-24.
• PM SVANidhi Yojana: ₹5,939.7 crore disbursed to 30.6 lakh women street vendors by Dec 2024.
• Udyam Registration: 40% of MSMEs in India are now women-owned.

Challenges Faced by Women in Financial Access:

• Credit Aversion: Fear of loan repayment and financial instability.
• Collateral & Guarantor Issues: 79% of women-owned businesses are self-financed, with limited access to formal credit.
• Poor Banking Experience: Women face bureaucratic hurdles and lack advisory support in financial institutions.
• Limited Financial Products for Women: Rigid loan structures do not cater to women’s unique financial needs.
• Lack of Credit Readiness: 30% of individual women entrepreneurs lack required documentation and financial records.

Way Ahead:

• Reimagining Credit Risk Assessment: Using AI, big data, and alternative scoring models to reduce gender bias.
• Gender-Intelligent Financial Products: Offering flexible repayment terms, non-collateral loans, and tailored services.
• Boosting Credit Readiness: Promoting digital transactions, bookkeeping, and financial literacy to increase loan accessibility.
• Strengthening Support Ecosystem: Expanding WEP and FWC networks to provide mentorship, networking, and access to capital.
• Increasing Gender Representation in Finance: Encouraging more women in financial decision-making roles to design inclusive products.

Conclusion:

Women are transitioning from borrowers to economic builders, leveraging financial tools for business growth and financial independence. While credit awareness and participation are rising, gender-based financial barriers persist. Addressing these challenges through inclusive policies, AI-driven credit assessments, and targeted financial products will unlock women’s full economic potential, driving India’s financial growth and gender equity.

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