Women-Owned Very Small Businesses Require Financial Institutions’ Support Worth INR 836 Billion

Mumbai, India – Women-Owned Very Small Businesses (WVSEs) in India require strong support from financial institutions (FIs), with an estimated credit demand worth INR 836 billion (US $11.4 billion), as per the latest report from the International Finance Corporation (IFC), ‘Opportunities and Challenges of Women-Owned Very Small Enterprises in India’, enabled by Intellecap. By removing existing obstacles, this assistance will allow their growth and drive socio-economic inclusion.

The report, which was launched on International Women’s Day, claims that WVSEs face numerous challenges, including insufficient access to capital, technology, and information, and infrastructure gaps. In India, there are over 15 million women owned MSMEs, and contrary to popular belief, more than 70 percent of them are manufacturing enterprises, many of which are home-based.

In addition to the hurdles highlighted, the segment of women entrepreneurs who frequently overcome biases from inside their families and the business community face partial treatment when it comes to lending. According to the report, FIs have traditionally catered to men-owned enterprises. The approach then restricts understanding of the operating contexts of women-owned enterprises and their socio-cultural constraints. Given that the majority of women entrepreneurs are self-funded, the COVID-19 pandemic’s lockdowns have had an impact on their businesses and limited their income.

This paper outlines the sectors in which WVSEs operate and discusses the features of these enterprises. It also provides a granular view of WVSE business operations in each sector, including the kinds of businesses they work with and the intermediaries who support them. Based on this, the report offers strategies for FIs to design new products and processes to meet the demands of WVSEs.

Wendy Werner, India Country Head, IFC, stated, “The COVID-19 pandemic exacerbated existing inequalities faced by India’s women entrepreneurs. This report explores how to unlock a US $11.4 billion financing gap for WVSEs and charts a roadmap for financial institutions to better serve this segment in a post-COVID world. IFC and its partners remain committed to creating an enabling entrepreneurial ecosystem so women-owned businesses can reach their full potential and contribute to India’s economic growth story.”

In light of this, Amar Gokhale, Associate Vice President, Livelihoods & Gender, Intellecap, commented, “The underlying objective of this report, especially on International Women’s Day, is to showcase that this segment of WVSEs can be not just a potential business opportunity for FIs, but that serving it can also create a positive impact on the social and economic status of women entrepreneurs.”

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