NBFCs empower rural Indian women to diversify businesses

In rural India, women have long struggled with financial exclusion, limiting their ability to start or grow their businesses. They often face obstacles such as a lack of resources, limited access to loans, and social barriers. Research from the World Bank shows that women receive only 27% of the deposits they contribute in credit, highlighting their difficulties. Traditional banks usually require collateral and large assets for loans, which many rural women do not possess. Consequently, these women often remain trapped in low-paying jobs or small-scale businesses that can be easily affected by outside factors like weather changes. However, a shift is happening thanks to non-banking financial companies (NBFCs). These organizations are changing the landscape for rural women by offering loans with less documentation and no collateral. Instead of focusing on land ownership, they consider business ideas and community support, making it easier for women to access credit. Small Finance Banks (SFBs), which work alongside NBFCs, provide low-interest loans for various ventures. This has enabled around 40% of rural women entrepreneurs to move beyond agriculture into areas like food processing and small retail businesses. They are now creating value-added products and reaching broader markets. Moreover, NBFCs are also promoting digital tools that help women manage their finances more easily. Applications and online platforms reduce the need for lengthy trips to traditional banks. This allows women to apply for loans and track their finances directly from their smartphones. As a result, rural women can sell products online and connect with a wider customer base. This digital shift, along with increased access to capital, is allowing them to diversify their income sources and gain financial independence. Successful women entrepreneurs are benefiting their communities as well. Many reinvest their earnings into local education and healthcare. Research indicates that businesses run by rural women are 25% more sustainable than those managed by men. NBFCs are playing a vital role in transforming the lives of rural women in India. Their support is helping women grow their businesses and foster positive changes within their communities.