Semi-urban, rural women account for 60% of women borrowers in India: Report

Indian women from semi-urban and rural areas now account for 60% of all women borrowers in the country, a report said, underscoring a deepening penetration of formal credit beyond metropolitan hubs, even as systemic hurdles—from gender biases to complex banking processes—continue to stifle broader progress.

The report titled, From Borrowers to Builders: Women’s Role in India’s Financial Growth Story, was jointly published by TransUnion CIBIL, NITI Aayog’s Women Entrepreneurship Platform (WEP), and MicroSave Consulting (MSC), revealed that semi-urban and rural women dominate credit uptake in agriculture (84%), business loans (65%), and gold loans (70%).

Southern states like Tamil Nadu (44%), Andhra Pradesh (41%), and Karnataka (34%) lead in women’s credit participation, while northern and central regions—despite high growth rates—lag in overall share.

Since 2019, retail credit demand among women has surged 3X, growing at a 22% compound annual rate. By 2024, 42% of loans availed by women were for personal finance, while business loans—though still a modest 3% of total credit—saw a jump of 4.6X.

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Despite this momentum, structural challenges persist as nearly 30% of women-led individual enterprises and 22.2% of collective enterprises lack credit readiness for even small loans.

Banks often demand collateral—a hurdle for 79% of self-financed women-owned businesses—while gender biases and cumbersome processes deter applicants.

Radhika, a 45-year-old juice shop owner in Telangana, typifies this struggle. Despite strong financial records, her loan application was rejected due to a guarantor requirement. “Banks should evaluate potential, not just paperwork,” she said in the report.

Such stories are common: 17% of women in the 90+ days-past-due category improved their credit status within six months of self-monitoring, yet many remain locked out by systemic inertia.

Meanwhile, Gen Z women saw a 56% annual rise in credit self-monitoring in 2024, while millennials followed at 38%. Over 27 million women now actively track their credit scores, with 62% classified as “Prime” or higher.

The report highlighted that government schemes like the PM Mudra Yojana, which disbursed Rs 2.22 lakh crore ($267 billion) to 4.24 crore women entrepreneurs in FY24, and the Stand-Up India initiative (84% of loans sanctioned to women) have bolstered access.

“True inclusion requires designing for women’s realities,” emphasised Manoj Kumar Sharma of MSC, noting that 60% of women borrowers still rely on informal lenders in rural areas.