The MSME (Micro, Small and Medium Enterprises) data shows that the MSME is having only 7% of the credit from the women-led MSMEs. It is very less as one-fifth of the MSMEs are run by women. The low female labour force limits the growth potential for women-led initiatives. However, why did only 7% of the women in the MSME take the benefit of credit? While the government promotes 50% credit for the women-led MSMEs empowering women. Let us find out below.

Credit To Women In MSME Only 7%, Indicates A Lower Level Women Participation In Loan Application

Why Only 7% Of MSME Credit To Women?

The MSME sector has almost one-fifth of women entrepreneurs. However, the involvement and application of these women-led MSMEs for credit is very low. RBI executive director, Nigam mentions that there is a strong need to provide more credit to the women in the MSMEs. The reason is the current low percentage of the credit to women. There are a lot of women’s involvement in the economic activities. Thus, there is a strong need to support women’s growth. Otherwise, it will lead to the downfall of economic growth as well. But why do only a few women apply for the credit?

There can be a lot of reasons for women not applying for the credit. The foremost reason is women face difficulty in submitting collateral. Women often do not get a share of the inheritance unless they are the only child of their parents or the parents have only female children. Thus, they lack collateral many times. The industry of credit also discriminates against women. The lenders often believe it to be a risky task to give credit to women entrepreneurs as they take with them a lot of possible scenarios. Many don’t believe in giving credit to women as they fear not getting returns on time.

Apart from that, many women borrowers seem to be underconfident in negotiating interest rates It seems they don’t believe they can get a credit at a good rate. The female labour force participation is 32.8% while men’s labour force participation is 77%. Niti Ayog organised this conference where Nigam pointed out the matter. More women’s participation will increase the economic growth of the country. There are several steps that he suggests to increase women’s participation and credit application. RBI also took initiatives like opening 2,400 centres for financial literacy at the block level. It is now compulsory for every district to have a literacy centre to help women have equal participation. Stay tuned for more information.

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