A recent study concluded that disadvantaged women often find it difficult to obtain loans from Indian banks.
A study conducted by Bharatiya Yuva Shakti (BYST) indicates that at least 85% of women entrepreneurs have encountered difficulties when seeking a loan from nationalized banks. He further added that at least 60% of them struggle to access essential financial services.
The survey lasted for three years between February 2019 and August 2022. During this period, the BYST female entrepreneurship development program attempted to establish profitable businesses in metropolitan cities like Delhi-NCR, Pune and Chennai. It aimed to increase entrepreneurship.
Improved understanding of banking system and business model
With the program, BYST noted that its program helped women better understand banking and entrepreneurship. Their skill set improved significantly at the end of August 2022. It was better for at least 93% of businesswomen.
Addressing the mintLakshmi Venkataraman Venkatesan, Founding Director and Director of BYST, said public sector banks such as State Bank of India and Union Bank of India have been helping women entrepreneurs to seek loans under the guidance of BYST.
The organization has helped several underprivileged entrepreneurs develop their skills and become more professional in their chosen fields. Their agents review every KYC complaint before the panel submits requests to the banks.
BYST reassures bank managers about candidates’ backgrounds and only submits proposals with a sustainable business model.
“These entrepreneurs, after going through months of training programs, are well-supported and therefore safe for banks to provide loans,” she added.
The program has trained 450 women entrepreneurs
The BYST program aimed to help women earning less than ₹2 lakh per year to start businesses in Tier I cities. It improved the skills of 450 female entrepreneurs with an average of 34. The program was able to generate direct and indirect jobs for approximately 10,000 workers.
BYST also helps women to acquire capital under MUDRA (Micro Units Development & Refinance Agency Ltd.) and CGTMSE (Credit Guarantee Fund Trust For Micro and Small Enterprises).
Trust workers helped the women develop business models and proposals that could make it easier for them to get their loan amount approved.
Of all the businesswomen they helped, 94% of recipients said they found the loan approval process smooth because BYST employees had already explained the whole process to them.
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Invisible biases faced by women
In July, Financial Express reported that female entrepreneurs often fall prey to invisible biases. We live in a patriarchal society where assets that can be taken as collateral are often in the names of male family members, making it difficult for women to get loans.
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It has also created a mindset that women are more successful in household building and would not be successful in running a business. The article also reports that invisible bias often results in loan applications being rejected or delayed in approval when the applicant is a woman.
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