News Excerpt:
The Reserve Bank of India’s executive director stated that the low participation of women in the labour force is a significant barrier to financial inclusion and overall economic growth.
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- Women receive only 7% of the outstanding credit to MSMEs, despite nearly a fifth of these enterprises being women-led.
- Female labour force participation was 32.8% in FY22, compared to over 77% for men.
Contribution of women in MSME
- According to the Udyam Registration Portal (URP) of the Ministry of MSME, women-owned MSMEs make up 20.5% of all registered MSMEs since the portal's launch on July 1, 2020.
- These businesses contribute 18.73% to the employment generated by all Udyam-registered units and account for 11.15% of the total investment.
- Their share of the total turnover of Udyam-registered MSMEs is 10.22%.
- On the Udyam Assist Platform (UAP), which registers Informal Micro Enterprises (IMEs), women-owned IMEs represent 70.49% of all IMEs since the platform's inception on January 11, 2023.
Challenges:
- The majority of women in India lack assets in their name to use as collateral. Additionally, complicated documentation and lack of technology pose barriers for women.
- Structural issues such as low capital levels, low labour participation, societal norms that restrict women from inheriting property, and limited access to education and training hinder women's ability to provide collateral for loans.
- Women borrowers often face "stereotyping" by financiers, who consider them higher risks, leading to higher interest rates, increased collateral requirements, or outright rejection of loan applications.
- Some behavioral issues among women borrowers, including being more risk-averse, less confident in negotiating loan terms, and less likely to apply for new loans due to fear of rejection.
Initiative taken by Government
- Micro Units Development and Refinance Agency (MUDRA) scheme is suited for women as it offers collateral-free loans, which is crucial since women often struggle to provide the required collateral for financing.
- Special drives to register women-owned MSMEs on the Udyam Registration Portal.
- An amendment to the Public Procurement Policy in 2018 mandates that Central Ministries/Departments/Undertakings procure at least 3% of their annual requirements from women-owned micro and small enterprises.
- Under the Credit Guarantee Scheme for Micro & Small Enterprises, two provisions have been introduced for women entrepreneurs since December 1, 2022:
- A 10% concession on annual guarantee fees and
- An additional 10% guarantee coverage up to 85% (compared to 75% for other entrepreneurs).
- The Ministry implements the ‘Skill Upgradation & Mahila Coir Yojana’ under the Coir Vikas Yojana, a training program for skill development of women artisans in the coir sector.
- The Prime Minister’s Employment Generation Programme (PMEGP) offers a higher subsidy to special categories, including women, to generate self-employment through the establishment of micro enterprises in the non-farm sector.
- The “SAMARTH” initiative aims to support women-owned MSMEs by providing skill development and market development assistance.
- Under the Zero Defect Zero Effect (ZED) Certification Scheme, women-owned MSMEs are eligible for a 100% subsidy on the cost of ZED certification.
Way Forward:
- In response to these challenges, the RBI has launched initiatives to promote financial inclusion, such as opening 2,400 financial literacy centers at the block level in partnership with nonprofits and making it mandatory for lead banks to have a literacy center in each district.
- Financial institutions can provide gender sensitivity training for relationship managers to better cater to women customers.
- Other steps include improving the technical knowledge of borrowers, adopting differentiated assessment mechanisms to appraise women's repayment capacity better, and conducting awareness campaigns about existing schemes for women entrepreneurs.
