Mumbai, India, March 11, 2014—IFC,
a member of the World Bank Group, has released a study that finds financial
institutions meet only 27 percent of the financing demand of women-owned
micro, small and medium enterprises in India.
The study titled Micro, Small, and
Medium Enterprise Finance: Improving Access to Finance for Women-owned
Businesses in India, undertaken by IFC in partnership with the government
of Japan, estimates that of the total financing demand of $158 billion
(Indian rupees 8.68 trillion) for women-owned businesses, formal sources
are able to channel only $42 billion (Indian rupees 2.31 trillion). This
leaves a significant gap of $116 billion (Indian rupees 6.42 trillion)
that financial institutions can meet through products and services tailored
for women entrepreneurs.
There are an estimated 3 million women-owned
enterprises across industries, representing about 10 percent of all micro,
small, and medium enterprises in India and employing over 8 million people.
The study notes that there is sound empirical evidence, particularly
from developed economies, that women borrowers have stronger repayment
history and present greater potential for cross sales compared to male
entrepreneurs, making them roughly twice as profitable for banks as a consumer
"Access to financing is an important
factor for women-owned businesses to become viable in today’s economic
climate. This segment is a significant market opportunity for banks in
India, and globally, as women entrepreneurs are proven to be excellent
long-term clients for banks," said Jennifer Isern, IFC Manager for
Access to Finance Advisory.
The study recommends that banks
can serve more women by lending to the services sector; about 80 percent
of women entrepreneurs run businesses focused on services. Historically,
banks have funded manufacturing enterprises, and relied heavily on collaterals
to give credit, to the disadvantage of women-owned enterprises. Investing
in women relationship managers, advisory desks at bank branches, and non-financial
services and training will help promote women entrepreneurs holistically.
Women-owned micro, small and medium
enterprises are an integral focus of IFC's work in South Asia. In addition
to making investments in private sector projects, IFC works with governments
to improve investment climate, builds skills of local entrepreneurs, and
promotes access to finance and markets for small businesses.
The report is available at: http://www.ifc.org/wps/wcm/connect/a17915804336f2c29b1dff384c61d9f7/Womenownedbusiness1.pdf?MOD=AJPERES
IFC, a member of the World Bank Group,
is the largest global development institution focused exclusively on the
private sector. Working with private enterprises in more than 100 countries,
we use our capital, expertise, and influence to help eliminate extreme
poverty and promote shared prosperity. In FY13, our investments climbed
to an all-time high of nearly $25 billion, leveraging the power of the
private sector to create jobs and tackle the world’s most pressing development
challenges. For more information, visit www.ifc.org