Women’s achievements in this era are exceptional, and they are making groundbreaking accomplishments in every sphere of life. And entrepreneurship is not an exception. According to a report by Bain & Company, there are an estimated 13.5 million to 15.7 million women-led enterprises in India. One of the reasons why the nation is experiencing the growth of women entrepreneurs is the emergence of microfinance institutions (MFIs) that have been supporting their financial security.
Among the multitude of financial services MFIs are providing, collateral-free income-generating loans have gained ground. It has given these women an opportunity to have much-needed access to capital. While collateral-free loans are helping women create a lasting impact on their communities, there are several market trends that have emerged.
Recognition of women’s potential: Today’s business landscape has witnessed a transformation where women’s entrepreneurship has been recognised as a vital source of economic growth. MFIs have been swift in responding to this trend by providing collateral-free loans to women. This, in turn, has provided a much-needed ecosystem for them to flourish without risking their personal assets.
Rise of digital lending and mobile-based services: Thanks to the emergence of digital lending and mobile-based services, financial services have now been accessible in the remotest areas of the country. With quick access to financial services, these technologies are empowering women, ensuring their financial inclusion, and fostering entrepreneurship. This has been possible due to the digital platforms that the MFIs have been leveraging for disbursing collateral-free loans, streamlining the application process, and reducing administrative costs.
More focus on women empowerment: The rise of microfinance services has been prevalent in influencing the decision-making power of women and directly impacting their socio-economic status. MFIs have recognised this requirement and have been aligning their lending practices and social objectives to support women who seek to start and fund their entrepreneurial journey.
Easy access to capital: Previously, women faced a myriad of challenges while accessing capital via traditional methods owing to the involvement of collateral. However, with the rise of collateral-free loans provided by MFIs, they have easy access to capital. The lack of collateral has significantly allowed the MFIs to provide services with a faster turnaround time. As a result of this swift service, it is creating a positive impact on communities and the economy as a whole.
Improved financial literacy: For women to properly utilise collateral-free loans, BC companies have been persistent in providing financial education. The financial content is made easy via AV (audio-visual) training, which uses visual aids and auditory elements to cultivate better understanding among women. This, in turn, is helping these entrepreneurs build the financial skills that are paramount to running a business and making informed decisions.
All things considered
Access to financial services has provided women with an opportunity to generate income, accumulate assets, and participate more fully in economic activities. Among the financial services, collateral-free loans have been playing a crucial role in uplifting these women, who earlier found it difficult to gain access to capital. These loans have not only helped them to start and grow the business but also improved their household income and living standards. Thanks to MFIs and their collateral-free loans, women are now significantly contributing to the overall development of communities and the nation.
Mr. Ajeet Kumar Singh, MD, CEO and Co-Founder, SAVE Solutions Pvt. Ltd.