Only 7% of MSME credit to women; low female labour force participation drag on growth: RBI ED

Reserve Bank's Neeraj Nigam addresses barriers to financial inclusion for women, emphasizing low credit supply and labour participation

Reserve Bank's executive director Neeraj Nigam on July 5 said low labour force participation among women is a barrier to financial inclusion efforts and also to broader economic growth.

He said there is also a need to up the credit supply to women, pointing out that only 7% of the overall outstanding loans to micro, small and medium enterprises are to women-led businesses.

"One significant barrier for financial inclusion and indeed to economic growth and development is more participation of females in economic activities," he said, pointing out that official data suggested female labour force participation at 32.8 per cent in FY22, as against over 77% in men.

Women constitute only 7% of the outstanding credit to Micro, Small & Medium Enterprises (MSMEs), he said, adding that this is very low when compared to nearly a fifth of the MSMEs being women-led.

Speaking at the 'Financing Women Collaborative' conference organized by Niti Aayog and Transunion Cibil here, Nigam expressed satisfaction on the access to financial services front, pointing out that the Pradhan Mantri Jan-Dhan Yojana (PMJDY) scheme and social security transfers have helped.

With the challenges on supply taken care of, he said there are issues on the demand side which warrant attention.

There are structural issues like low level of capital, labour participation, societal norms like restricting women from inheriting property that limit their ability to show collateral for lending and also lower access to education and training.