Women-Led MSMEs Face Credit Hurdles Despite Government Schemes

Quick Summary

• Micro, Small and Medium Enterprises (MSMEs) contributed nearly 30% to India’s GDP in 2024, with plans to increase this to 35%.
• Women-led MSMEs represent about 20% of registered msmes but account for only 10% of the sector’s turnover. They receive only around 11-15% of investments, indicating persistent financial inclusion gaps.
• There is a meaningful credit gap in fund disbursement; women face a credit gap of roughly 35%, compared to men at 20%.
• The Pradhan Mantri MUDRA Yojana (PMMY) facilitated collateral-free loans but allocated only ₹2.25 lakh crore (41%) out of ₹5.41 lakh crore towards women-led MSMEs despite women owning approximately 64% of PMMY loan accounts.
• Informal micro-enterprises (IMEs), predominantly run by women, are supported by the Udyam Assist Portal for priority sector lending eligibility.Over 1.86 crore IMEs were registered in the portal, with women owning around 70.5%.
• Challenges include lack of awareness about schemes and limited access to formal credit due to financial literacy issues and insufficient collateral or legal documentation.
• Discriminatory barriers continue as studies show that women entrepreneurs require more bank visits than men to sanction loans.
• Policy measures like reducing repo rates and cash reserve ratios aim to enhance liquidity for better loan availability.

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Indian Opinion Analysis

The contribution of MSMEs-especially those led by women-to India’s economic framework highlights their pivotal role in employment generation and innovation within smaller-scale industries. Despite notable initiatives like PMMY or the Udyam assist Portal aimed at fostering inclusion, systemic hurdles such as high credit gaps and financial illiteracy persistently hinder equitable growth opportunities for female entrepreneurs.

Addressing these disparities requires more targeted approaches beyond merely injecting liquidity into banks through rate cuts or refinancing programs.Banks must actively engage local communities with educational resources while improving clarity in fund allocation under government schemes.The data underscores an urgent need for structural changes not just in policy intent but it’s execution-especially regarding gender-responsive buisness support frameworks amid growing aspirations surrounding women’s participation across rural entrepreneurial ecosystems.

Read more: Credit Gap Challenges Women Entrepreneurs