Financial inclusion focuses on making financial services accessible to all, particularly to underserved and marginalized groups. In Maharashtra, women entrepreneurs leading MSMEs are shaping the state’s economic landscape by driving innovation, creating jobs, and reducing poverty. However, these changemakers often face unique challenges in accessing the funds required to realize their full potential.

The Importance of Financial Inclusion for Women-Led MSMEs

1. Financial Inclusion Boosts Women’s Control Over Household Resources

Financial inclusion plays a vital role in empowering women by improving their control over household resources. When women have better access to financial services, they can save more, manage household expenses efficiently, and make informed financial decisions. This financial independence allows women to contribute positively to family well-being, leading to better outcomes in areas like health, education, and overall quality of life.

2. A Growing Force

In India, over 3.01 million businesses are either fully or partially owned by women. These women-led businesses are not just making significant contributions to the economy; they also play a pivotal role in creating job opportunities. Collectively, they contribute 3.09% of the industrial output. More impressively, these businesses employ over 13.48 million people, accounting for approximately 10.24% of India’s total workforce. This reflects the immense potential of women entrepreneurs in driving economic growth.

3. Positive Social Impact of Financial Inclusion

Women who have access to financial services are more likely to invest in their families’ health, education, and future. This has a ripple effect on reducing poverty and inequality, fostering more inclusive growth across communities. As women succeed in business, they contribute to broader societal changes, benefiting entire communities and helping to uplift those who are marginalized.

4. Women as Key Drivers of Entrepreneurship

Women entrepreneurs in India are making remarkable strides, particularly in the MSME sector, by channeling their savings into businesses. Their entrepreneurial activities not only enhance their financial standing but also contribute to community development, improving livelihoods and creating sustainable growth in local economies.

5. Higher Profit Margins in Women-Led Businesses

Research has shown that businesses led by women tend to have higher profit margins than those led by men. While male-led businesses may generate higher turnover, their profit margins are typically lower, with men’s businesses averaging around 19%, compared to 31% for women-led businesses. This indicates that women entrepreneurs are often more efficient in managing their resources, focusing on sustainable business practices, and delivering better financial outcomes in the long run.

6. Barriers to Financial Access

Despite their growing presence in the economy, women entrepreneurs still face several barriers to accessing finance. One major issue is that women-led MSMEs receive only about 7% of the total loans given to the sector. Structural challenges such as limited capital, lower levels of labor participation, and societal norms that restrict women’s rights to property inheritance hinder their ability to access traditional lending options.

7. Huge Market Opportunity for Financial Institutions

The demand for financial support from women-owned businesses is enormous. The total annual financing requirement for women-led enterprises in India is estimated at INR 1.95 lakh crore (USD 29.16 billion). This represents a significant market opportunity for formal financial institutions to target and support women entrepreneurs. Despite the challenges, the potential for growth in this segment is vast, and tapping into this market could help drive economic development across various sectors.

Central Government Schemes for Empowering Women Entrepreneurs

1. Skill Upgradation and Mahila Coir Yojana

This programme trains women artisans in coir spinning for two months, with a stipend of Rs. 3000/- per month. It aims to enhance their skills and improve livelihoods in the coir industry.

2. Mahila Samriddhi Yojana

A micro-finance scheme offering women financial assistance up to Rs. 1,40,000/- at reduced interest rates, enabling them to start or grow their businesses.

3. Women Entrepreneurship Platform (WEP)

WEP is an online platform that provides women entrepreneurs with valuable resources like workshops, industry content, and partnerships to help them grow and succeed in business.

4. Support Training and Employment Programme for Women

This programme provides women with employability skills and entrepreneurship training, enabling them to secure jobs or start their own businesses.

CONCLUSION

Even though the contribution of women entrepreneurs to India’s economic growth is gaining more recognition, financing constraints continue to pose significant challenges. Despite their strong impact, women entrepreneurs still face difficulties in accessing credit, which limits their ability to scale and expand their businesses. Overcoming these financing barriers is crucial to unlocking the full potential of women-led businesses and ensuring they can continue to drive innovation and job creation in the Indian economy.

Source:

https://www.startupindia.gov.in/content/sih/en/women_entrepreneurs.html

https://www.thehindu.com/business/only-7-of-msme-credit-to-women-low-female-labour-force-participation-drag-on-growth-rbi-ed/article68371890.ece https://www.ifc.org/en/insights-reports/2010/financial-inclusion-for-women-owned-msmes-in-india