A "good risk" for NBFCs: Investing in the untapped potential of women entrepreneurs
Across industries, women entrepreneurs are making significant contributions—from leading MSMEs in manufacturing to pioneering startups in technology and services.
Philanthropist and businesswoman Melinda Gates once said, “When we invest in women and girls, we are investing in people who invest in everyone else.”
This powerful statement reflects the tremendous untapped potential of women entrepreneurs. The business landscape is shifting, with women entrepreneurs increasingly taking centre stage in driving innovation and economic growth. Yet, financial inclusion for this segment remains underwhelming.
Women-led enterprises often face challenges in securing credit not because of their lack of potential but due to systemic biases and limited lender penetration. For NBFCs, catering to this underserved market isn’t just a strategic opportunity—it’s a meaningful way to bridge a crucial gap, backed by innovation and thoughtful practices.
Women in business: An overview
Across industries, women entrepreneurs are making significant contributions—from leading MSMEs in manufacturing to pioneering startups in technology and services.
According to a 2022 International Finance Corporation report, about 90% of women entrepreneurs in India have not borrowed from a formal financial institution, largely due to barriers such as limited collateral access and a preference for small loan amounts that financial institutions often overlook.
Many of these businesses are unregistered or operate on a smaller scale, often excluding them from traditional lending ecosystems. Yet, data consistently shows that women entrepreneurs tend to be prudent borrowers, with lower default rates than their male counterparts, making them an attractive segment for lenders willing to innovate.
Why serving women entrepreneurs is a good risk
The untapped potential in this segment is immense. Women-led businesses often demonstrate resilience and resourcefulness—traits that make them low-risk borrowers despite external challenges.
However, traditional lending models frequently overlook these qualities due to inadequate data and rigid credit scoring systems. By adopting inclusive, tailored strategies, NBFCs can tap into this market, fostering financial inclusion while ensuring healthy portfolio performance.
Moreover, engaging with women entrepreneurs isn’t just about credit—it’s about unlocking an ecosystem of innovation and trust. Women-run businesses tend to have a multiplier effect on local communities, creating jobs and promoting economic stability. These positive ripple effects align well with the long-term objectives of lenders aiming to foster sustainable growth.
Innovation and all-women teams: Changing the game
Empowering women entrepreneurs begins with innovation. Traditional credit models are reimagined to include alternative data points, such as transaction histories and business performance metrics, enabling more accurate risk assessments for first-time borrowers. Digital tools make the process seamless, ensuring accessibility even in remote regions.
What truly sets this approach apart is the formation of all-women teams, encompassing sales, credit evaluation, and collections. This initiative creates a more relatable and empathetic environment for women borrowers, breaking down psychological and cultural barriers that often deter them from seeking formal credit.
These teams not only understand the unique challenges women entrepreneurs face but also advocate for solutions tailored to their needs, such as flexible repayment structures or small-ticket loans.
Building trust through thoughtful practices
Trust is the cornerstone of serving this segment effectively. By engaging directly with women entrepreneurs, understanding their business models, and offering personalised solutions—NBFCs can establish relationships that go beyond transactions.
Offering mentorship programmes, financial literacy workshops, and access to networks further enhances the value proposition for borrowers, ensuring their success and the lender's growth.
A future of inclusive lending
Serving women entrepreneurs is more than just a market opportunity; it’s a step toward creating a more equitable financial system. By taking what may appear as a “good risk,” NBFCs can drive meaningful change, unlocking economic potential that has remained dormant for too long.
With the right mix of innovation, empathy, and commitment, lenders can ensure that financial inclusion for women entrepreneurs becomes not just a vision but a reality—benefiting both the borrowers and the broader economy.
For NBFCs, this isn’t just about numbers; it’s about being on the right side of history, and it’s about fostering resilience, inspiring innovation, and proving that lending to women entrepreneurs is not only viable but transformative.
In a world hungry for inclusive growth, taking this "good risk" might just be the best decision the financial sector ever makes.
Shalinee Mimani is the Chief Risk Officer of Godrej Capital.
Edited by Suman Singh
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)