Ashraf Engineer
September 13, 2025
EPISODE TRANSCRIPT
Hello and welcome to All Indians Matter. I am Ashraf Engineer.
In August, yet another study confirmed what we’ve known for a long time – women entrepreneurs face a serious disadvantage in securing formal credit compared to men. The Goa Institute of Management study pointed to a serious gender gap in access to credit after looking at the data on women-owned enterprises in the unorganised sector. They studied borrowings by these enterprises from banks, government institutions and other formal sources of finance.
The data of more than 4 lakh firms was considered after being drawn from the 2022-23 round of the National Sample Survey Office Annual Survey of Unincorporated Sector Enterprises.
Why is it crucial to bridge this gender credit gap? It is holding back our collective progress — even though women are increasingly taking up entrepreneurship.
Financial inclusion is needed for individual empowerment but more importantly it fosters community growth and that of the economy. A 2024 World Bank report asserted that countries with greater female financial inclusion had more GDP growth, less income inequality and higher resilience against economic shocks.
So, bridging the gender credit gap is not just about fairness. It’s about national interest.
SIGNATURE TUNE
Women make up roughly half of India’s population but are estimated to contribute only 18% to the GDP. Imagine if this were to become more equitable.
A recent report by the NITI Aayog, India’s central planning body, titled ‘From Borrowers to Builders – Women’s Role in India’s Financial Growth Story’, said women seeking credit have risen at 22% CAGR since 2019 and 60% of them hail from rural or semi-urban areas. This is great! However, it’s telling of the barriers they face that, from 19% in 2019, 36% today get credit against gold. This shows that women are reluctant to seek formal credit because of the institutionalised challenges they face.
Financial institutions play an important role in boosting entrepreneurship and job creation. If there is disparity for caste, gender, religion, etc, in their loan disbursement, the goals I mentioned would not be achieved.
Among the various institutionalised challenges is the misconception that women borrowers are a higher credit risk. The data, however, tells a different story. Across developing economies, studies show that women’s default rates are much lower than men’s. TransUnion CIBIL reports that in India women have a default rate of 5.2% compared to 6.9% for men.
And we also know why. Women borrow more prudently, avoid overborrowing and are more disciplined when it comes to repayment. When financial institutions stick instead to outdated perceptions, it weakens their own lending portfolios and constricts economic inclusion.
So, what we have is a situation in which, in 2024, personal loans availed by women totalled Rs 4.8 lakh crore but only Rs 1.9 lakh crore was disbursed as business credit. Less than 3% of the total. It indicates not lack of ambition but of support. Expecting rejection every time, many potential women entrepreneurs simply do not apply for loans at all. Instead, they rely on personal networks or savings for business capital.
In addition, India’s lending systems lack the sophistication to account for home-run businesses, informal ones or non-traditional work models that many women are part of.
It’s a similar story globally. Roughly 40% of the global female population lacks access to formal financial services. They are 20% less likely than men to have bank accounts and 17% less likely to secure formal loans. About 1.1 billion women are excluded from formal financial systems.
The need to enable women entrepreneurs is straightforward: globally, women entrepreneurs drive economic growth and help to reduce poverty. Financial inclusion of women is tied to social empowerment – women with access to financial resources tend to make decisions that benefit their entire family and community. In India, research by UN Women in 2024 showed that financially independent women are 33% more likely to send their daughters to school and 25% more likely to invest in healthcare for their families. So, credit inclusion has a multiplier effect.
The social impact of financial inclusion can be transformative. It transforms gender norms and hands women greater social autonomy. According to Organisation for Economic Cooperation and Development data, countries with more financially empowered women record lower domestic violence and greater child welfare.
Despite all this, a massive global credit gap, estimated at $1.5 trillion, persists for women-owned businesses. In fact, more than 100 countries have legal barriers to women’s entrepreneurship – these include laws forbidding them from signing contracts, registering a business or opening bank accounts.
Even when such barriers don’t exist, many banks in developing countries demand fixed assets like property titles as collateral. Often, women’s assets are held in the names of husbands or male relatives. Women own only about 1% of registered land titles. This is a further hurdle.
So, women’s economic empowerment is a central focus within the United Nations Development Programme’s Six Signature Solutions and the UNDP’s Gender Equality Strategy 2022–2025 identifies finance as a pivotal facilitator of gender parity. The economic empowerment of women is a pillar of the UNDP’s Gender Equality Global Program and can drive inclusive economies.
The gender credit gap requires more than well-meaning words now. What’s needed is structural change. Financial institutions need a shift of mindset to appraise women’s actual credit behaviour. Gender-aware credit products, easier access and collateral models that are adapted to reality are critical.
Government-backed credit guarantees reduce the risk for lenders. And financial literacy can empower women with the information and confidence to engage with formal finance.
Let’s recognise that women’s economic empowerment is about more than transcending gender boundaries. When women are financially empowered, it improves their own well-being and drives family welfare and economic growth. Development or ‘vikas’ has been a buzzword but any initiative that ignores women’s economic empowerment will fall short.
So, the argument for change is clear: stop seeing women as exceptions in credit. Inclusive economic growth depends on it.
Thank you all for listening. Please visit allindiansmatter.in for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at editor@allindiansmatter.in. Catch you again soon.
