Credit and Finance for MSMEs: Women-owned micro, small and medium enterprises (MSMEs) account for under round 20 per cent or roughly 1.23 crore models out of India’s general base of over 6 crore proprietary MSMEs. The share has crawled from solely 13.72 per cent again in FY11. The progress within the quantity of ladies MSMEs within the nation has poor entry to inexpensive credit score as one of many main deterrents. While the federal government has made interventions for girls to get credit score entry for beginning their companies, there was no devoted central authorities scheme within the nation for current ladies MSMEs on the progress stage searching for collateral-free capital to develop their enterprise.
This is the problem ladies entrepreneurs like Gurugram-based Harjinder Kaur Talwar have typically come throughout. Talwar has been working her firm Comvision India since 1995 which presently offers parking and visitors administration options. So far, her collateral-based financial institution credit score publicity stands at round Rs 15 crore.
“We have been giving collateral after collateral. It is very tough to raise credit from banks without collateral. Women need capital to scale up but they don’t have enough collateral in their name. It is usually in the husband’s name. To solve this problem, there is no credit scheme by the government for women entrepreneurs,” Talwar informed Financial Express Online as she indicated in the direction of the idea of property inheritance in India that typically belongs to male members of a household. This normally berefts ladies of belongings that may be utilised as collateral.
Comments from the MSME Ministry and Finance Ministry for this story weren’t out there by the point of publishing.
However, consultants maintained that the federal government’s intent in offering collateral-free credit score schemes is to allow entrepreneurship and assist in establishing companies as a substitute of gender-based backing as soon as the enterprise has already achieved some scale.
“As far as government schemes for funding are concerned, they are gender agnostic. This means that once you are already in business and not starting up then performance should be the basis for accessing additional credit instead of gender,” stated Ashok Saigal, Ashok Saigal, MD, Frontier Technologies and Co-Chairman, CII National MSME Council informed Financial Express Online.
Anil Bhardwaj, Secretary-General at MSME physique Federation of Indian Micro Small & Medium Enterprises (FISME) believed as soon as the enterprise grows up, there is no such thing as a particular credit score scheme for girls as a result of there aren’t any women-specific issues encountered. “Gender-based discrimination is not generally the case today. Once growth is there, women entrepreneurs can equally tap bank credit. Having said this, there is room for women-centric funds in India,” he informed Financial Express Online.
However, ladies entrepreneurs are of the opinion that gender-based biases persist and that lenders are generally conservative in supporting women-led models. “Unless the government takes a strict approach to lend to women MSMEs in a stipulated time, lending to women entrepreneurs won’t enhance,” stated Rajni Aggarwal, President of the advocacy group for girls entrepreneurs — Federation of Indian Women Entrepreneurs had informed Financial Express Online.
Moreover assume tanks additionally be aware that there’s unconscious gender bias holding ladies entrepreneurs again in India. “Unconscious gender bias has been found to be a key factor impeding the progress of women entrepreneurs,” in accordance with the unbiased world assume tank Observer Research Foundation (ORF).
According to a examine printed by ORF in September 2019, whereas entrepreneurship is an inherently dangerous enterprise, ladies are sometimes simply assumed to be much less prepared to take dangers. “However, if women do approach investors, they are perceived differently than men, and investors have been found to prefer pitches presented by men as compared to those by women, despite identical content.”
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“Further difficulties with procuring funding occur due to the fact that Indian women rarely own property, which can be used as collateral for loans. Moreover, about 79 per cent of women-owned ventures are self-financed, but families are often hesitant to support their daughters’ entrepreneurial ventures financially,” the examine by Sabrina Korreck, Former Senior Fellow at ORF famous.
The credit score hole for women-owned 15 million MSMEs stands at $158 billion (round Rs 12 lakh crore) with 90 per cent of such ladies entrepreneurs counting on casual sources of financing, in accordance with the information from International Finance Corporation (IFC). Overall, as per World Bank estimates, the credit score hole for Indian MSMEs is at $380 billion (almost Rs 30 lakh crore).
However, the institutional downside confronted by ladies entrepreneurs at progress phases with respect to the shortage of collaterals in their very own names is one which must be resolved on precedence, consultants famous. For this, money flow-based credit score disbursements must be the best way out.
“To get credit for business expansion, we are pushing for the fact that anybody having an existing relationship with a lender for a minimum period of five years, should be able to raise finance based on cash flow performance. This would help growing women entrepreneurs to not get constrained by collaterals,” stated Saigal.
The Reserve Bank of India (RBI) has additionally been backing the money move strategy to spice up credit score to small companies. “To improve the credit to gross domestic product (GDP) ratio, access to credit and cost of credit need to be addressed by lesser reliance on collateral security and greater cash-flow based lending,” governor Shaktikanta Das had stated earlier at a webinar on investor schooling organised by National Council of Applied Economic Research (NCAER).
Currently, Stand-Up India is the one central authorities scheme, launched by Prime Minister Narendra Modi in April 2016, specializing in ladies entrepreneurs aside from scheduled caste and scheduled tribe entrepreneurs searching for establishing a greenfield enterprise (first-time enterprise to be arrange by the beneficiary). The credit score assist ranges from Rs 10 lakh to Rs 1 crore to not less than one SC/ST borrower and not less than one lady borrower per financial institution department of scheduled industrial banks. This signifies that entrepreneurs launching their second or third enterprise wouldn’t be eligible for the scheme.
Moreover, “if one branch has given loan to one SC/ST and women entrepreneur then it doesn’t have to give more loans under the scheme. To help more such borrowers benefit, the scheme should mandate a certain number of loans to be disbursed at least once or twice a year, etc.,” Mukesh Mohan Gupta who heads MSME physique Chamber of Indian Micro, Small & Medium Enterprises (CIMSME) informed Financial Express Online.
There are a couple of different schemes as properly for girls similar to Mahila Udyam Nidhi Scheme, Stree Shakti Package for Women Entrepreneurs, Dena Shakti Scheme, Udyogini Scheme, Cent Kalyani Scheme. However, most of them have a credit score restrict as much as round Rs 10 lakh (within the case of Mahila Udyam Nidhi Scheme) or much less (Rs 3 lakh in Udyogini scheme) to cater to micro or particular person models. In phrases of a gender-agnostic collateral-free scheme, the federal government’s credit score assure fund belief for micro and small enterprises (CGTMSE) programme presents assure cowl to lenders for collateral-free lending as much as Rs 2 crore to micro and small enterprises. Over 7 lakh ensures for Rs 55,217.74 crore had been accredited in FY22 — second highest in eight years, in accordance with the information from MSME Dashboard.
Source: www.financialexpress.com”