A recent report by DBS Bank and CRISIL has highlighted the financial landscape for women entrepreneurs in India. The findings reveal that a large percentage of self-employed women rely on personal savings to start and run their businesses, with fewer women opting for bank loans or other financial institutions. The report provides a detailed insight into how women in cities are funding their businesses and embracing digital payments.
Savings Over Loans: A Financial Trend
The report reveals that 39% of self-employed women in India use personal savings to finance their businesses. In contrast, only 21% of women have taken business loans from banks. Additionally, 26% of women entrepreneurs seek financial support from family and friends, avoiding traditional banking systems altogether.
Only 3% of women sought loans from non-banking financial companies (NBFCs), while just 1% turned to fintech companies for financial support. These statistics suggest a significant gap in how financial institutions are engaging with women entrepreneurs and providing tailored services to meet their needs.
Gold as Collateral and the Popularity of Overdraft Facilities
For women who do secure loans, personal property and gold are the preferred forms of collateral. The highest use of gold as collateral was seen in Chennai, while Kolkata recorded the lowest. Shares and mutual funds were the least used, with only 10% of women opting for these as collateral.
Cash credit (CC) and overdraft (OD) are the most favored banking products among women entrepreneurs, with 39% using these facilities. However, the report notes a decline in their usage as women grow older and their financial status improves.
Growing Digital Payment Adoption
A promising trend that emerged from the study is the increasing adoption of digital payments. According to the report, 83% of self-employed women in metropolitan areas have integrated digital payment methods into their businesses. In Delhi, 97% of women entrepreneurs accept digital payments, followed by 93% in Hyderabad and 90% in Mumbai.
Unified Payments Interface (UPI) is the most popular mode of digital transactions, with 35% of women using it to receive payments and 26% using it for business-related expenses. Despite the shift towards digital methods, cash still plays a major role in handling payroll and operational costs for 36% of women entrepreneurs.
Retirement Planning and Employee Benefits
Women entrepreneurs are increasingly focusing on financial security, both for themselves and their employees. Around 66% of self-employed women are actively investing in pension plans for their retirement. Delhi leads the way with 86% of women prioritizing retirement planning, followed by Kolkata (72%) and Pune (64%).
Not only are women securing their own futures, but 38% of them are also offering retirement benefits to their employees. This emphasis on long-term financial planning reflects a growing awareness of economic security among women entrepreneurs.
A Step Towards Financial Independence
The DBS and CRISIL report, based on a survey of 4,000 self-employed women across major cities, highlights both the progress and challenges faced by women entrepreneurs in India. With personal savings being the main source of business funding, and bank loans being less favored, it’s clear that more needs to be done to support women in accessing formal financial services.
As more women embrace digital payments and focus on retirement planning, there is hope for a stronger, more inclusive financial future for women entrepreneurs in India.
