A recent survey conducted by DBS Bank India and CRISIL reveals that 65% of self-employed women in urban India have not taken business loans. The survey highlights the financial strategies and challenges faced by these women, with many relying on personal savings and other low-risk investments to fund their businesses. This trend underscores the need for more accessible and affordable financial products tailored to the needs of women entrepreneurs.
Financial Independence and Risk Aversion
The survey indicates that a significant portion of self-employed women prefer to use their personal savings to fund their businesses. Approximately 39% of these women rely on their savings, reflecting a cautious approach to financial management. This preference for self-funding is particularly pronounced among older women, with 52% of those over 45 years old using their savings compared to 36% of those aged 25-35 years.
Despite the availability of various loan options, many women remain hesitant to take on debt. Concerns about high interest rates and the burden of repayment are major deterrents. About 26% of the respondents cited high interest rates as a reason for not taking business loans. This risk-averse behavior is also evident in their investment choices, with a significant portion opting for safer options like savings accounts and gold.
The reliance on personal funds and low-risk investments highlights the need for financial institutions to develop products that address the specific concerns of women entrepreneurs. Tailored financial solutions could help bridge the gap and encourage more women to seek external funding for their businesses.
Challenges in Accessing Business Loans
One of the key findings of the survey is the difficulty self-employed women face in accessing business loans. Many women are unaware of the financial products and services available to them. The survey revealed that 24% of respondents were not aware of government schemes designed to support women entrepreneurs. This lack of awareness limits their ability to take advantage of available resources.
Additionally, the process of securing a loan can be daunting. Women often have to provide collateral, such as personal property or gold, to secure a loan. This requirement can be a significant barrier, especially for those who do not have substantial assets. The survey found that 28% of women used personal property as collateral, while 25% used gold.
Financial literacy and awareness programs could play a crucial role in addressing these challenges. By educating women about the available financial products and how to access them, more women could be empowered to seek the funding they need to grow their businesses.
The Role of Digital Payments
The survey also highlights the growing role of digital payments in the financial management of self-employed women. With the rise of digital payment platforms like UPI, more women are adopting digital methods for their business transactions. The survey found that 73% of self-employed women preferred receiving payments digitally, and 87% used digital methods to pay their business expenses.
Digital payments offer several advantages, including convenience, security, and ease of tracking transactions. They also provide a way for women to build a digital financial footprint, which can be beneficial when applying for loans or other financial products. The increased use of digital payments reflects a broader trend towards digitization in the financial sector.
However, cash remains an important part of business operations for many women. The survey found that 36% of respondents still used cash for payroll and operational expenses. This indicates that while digital payments are on the rise, there is still a need for a balanced approach that accommodates both digital and traditional payment methods.
