Beyond Beti Bachao, Beti Padhao: The Unfinished Business of Financing Women Entrepreneurs

Women entrepreneurship in India is rising. Yet, access to formal credit remains a major constraint. Mainly due to structural barriers embedded in the financial system. A recent joint study by NITI Aayog, TransUnion CIBIL and MicroSave Consulting (MSC) revealed that between 2019 and 2024, women borrowers grew at a 22% compound annual growth rate (CAGR).

Importantly, in 2024 alone, about 37 lakh new loan accounts were opened by women for business purposes — including MSME loans, commercial vehicle loans and loans against property — with total disbursements of ₹1.9 lakh crore. Yet these advances sit atop stubborn fault-lines.

The Hidden Wall

The majority of women-led micro and small enterprises in India operate without formal asset ownership. According to a 2022 report by the International Finance Corporation (IFC), of around 15 million women-owned MSMEs, over 90% have never availed finance from formal financial institutions. This is not due to lack of enterprise, but lack of acceptable collateral or formal financial history.

Path-breaking or not, a business without property deeds, fixed assets or audited books remains invisible to traditional lenders. The “thin-file” problem, which means the absence of formal credit history or documented income, disproportionately affects women, especially those running home-based, informal or micro-businesses. Researchers note that many such businesses remain dependent on personal savings or informal lenders, which leads to a spiralling path of never-ending debt.

Worse: this bias is built into the system, not just exhibited at isolated instances. According to the same IFC study, lenders often perceive women-only micro businesses as “high risk”. It is more because of structural assumptions in ownership, experience and scale, that labels women micro businesses as ‘high risk.’

Gender Gap in Credit Access

A recent survey published in 2024 as part of the Bharat Women Aspiration Index (BWAI) found that 47% of women entrepreneurs in MSMEs face significant challenges in obtaining formal credit. Even more striking is the knowledge that 95% of those surveyed were unaware of existing government or institutional schemes that could support their business financing needs. This informational blind spot forces many women toward informal lenders, whose predatory interest rates undermine profitability and long-term sustainability.

Moreover, despite progress in bank account ownership (via financial inclusion schemes), credit access remains skewed. A 2020 study estimated that women receive only 27% of credit relative to their deposits, compared to 52% for men, thus indicating a significant structural bias in credit allocation.

Financial Products Not Built for Women

Even when women approach formal lenders like NBFCs and MFIs, the offerings seldom align with their realities. Loan sizes are often too small for scaling, tenures are short, and documentation requirements are rigid. Support services such as financial literacy, mentorship, and business advisory are largely absent, despite being crucial for first-generation entrepreneurs. As a result, many women-led businesses remain undercapitalised, informal, and vulnerable, never reaching their full potential or performance.

A Way Forward: Design, Data & Dedicated Support

To unlock women’s entrepreneurial potential, the finance ecosystem needs structural changes, not charity:

• Alternative credit evaluation: Rather than relying solely on collateral or credit history, lenders must incorporate cash-flow data, digital payment history, GST / supply-chain records, and customer invoices. IFC’s research makes this recommendation for micro and very small women's enterprises.
• Gender-smart credit products: Collateral-free working capital loans, scalable ticket sizes, flexible repayment schedules, and minimal documentation must be tailored to serve micro and small women-led enterprises.
• Support ecosystem: Financial literacy programmes, bookkeeping support, and mentorship networks are essential for women operating informal or micro enterprises in semi-urban and rural India. A Tide-India survey found that less than two in five women reported having access to mentoring or structured business guidance. This gap needs to be filled.
• Data & institutional recognition: Systematic collection of gender-disaggregated data on loan uptake, business performance, defaults, and growth. This will help dismantle structural bias and build evidence-based confidence for lenders.
• Policy-backed credit guarantees: Public-sector support to de-risk lending for women entrepreneurs, especially in the case of growth capital. This can be done through schemes that allow unsecured or cash-flow-based lending, reducing dependence on physical collateral.

Financing Women Is Smart Economics

Women-led MSMEs have a multiplier effect: they generate local employment, especially for other women; strengthen non-metro economies; bring diverse skill sets into entrepreneurship; and inject resilience into India’s economic fabric. When they receive adequate financing and institutional support, they contribute not just to livelihoods but to inclusive growth, diversification, and social uplift.

“Beti Bachao, Beti Padhao” laid the moral and social foundation. The next step must be structural: ensuring that financial inclusion truly includes capital, opportunity, and support. For millions of women entrepreneurs and for India’s economic future, anything less would be a promise unfulfilled.

By Vishal Kaul

(The writer is Head-Strategic Alliances, Urban Money and a seasoned Banker and Mortgage Specialist working for India’s largest loan distributor company. He writes about financial policy, digital services, and public infrastructure in India.)