Women entrepreneurs are increasingly recognized as powerful drivers of economic growth, innovation, and social change. Yet, despite their growing presence in India’s entrepreneurial ecosystem, they continue to face significant barriers in accessing formal credit. A recent study, featured in a PTI report, underscores this persistent gender gap in the financial system, particularly for women-led enterprises in the unorganized sector.

The research, conducted by the Goa Institute of Management (GIM) and published in the journal Applied Economics, highlights a critical insight: while women-owned enterprises are at a disadvantage when seeking loans from banks and government institutions, the adoption of digital financial technologies such as internet banking and online services can help reduce this disparity.

The Gender Gap in Access to Finance

The unorganized sector forms the backbone of India’s economy, employing millions and contributing substantially to GDP. Yet, women entrepreneurs in this sector remain underfunded. The study analyzed data from the 2022–23 round of the National Sample Survey Office’s Annual Survey of Unincorporated Sector Enterprises (ASUSE), which covered over 400,000 enterprises.

Findings revealed a consistent pattern: women-led firms face more challenges in securing formal loans compared to men-led firms. This inequality, researchers argue, not only limits women’s entrepreneurial growth but also hampers job creation and economic development in the informal sector.

“Financial institutions play a very important role in boosting entrepreneurship and job creation in India’s informal sector. Any disparity along the lines of caste, gender, etc., in the loans they grant is likely to severely limit the good they can achieve with the credit they grant,” said Professor Ashay Kadam of GIM.

How Digital Finance Narrows the Gap

While the credit disparity is concerning, the study found hope in the role of digital financial technologies. Tools such as internet banking, mobile wallets, and online loan applications were shown to improve women entrepreneurs’ chances of securing credit.

By reducing information asymmetry and lowering the need for repeated physical visits to banks, digital platforms simplify the loan process. For women—who often face mobility constraints, time limitations, or social barriers—this digital shift can be transformative.

“Access to formal finance is essential for the development and growth of women entrepreneurship in India. While women firm owners face disadvantages in securing formal loans compared to men, the use of digital technology provides a ray of hope in bridging this gender gap,” explained Assistant Professor Swarna Parameswaran, one of the study’s co-authors.

The Importance of Financial Literacy

However, the benefits of digital finance can only be realized if women entrepreneurs are equipped to use these technologies effectively. The study pointed out that while financial products are evolving rapidly, awareness and knowledge diffusion are not keeping pace.

“At the bottom of the pyramid, we need to invest just as much time, effort, and money in driving financial literacy as we do in creating new financial technology,” Prof. Kadam emphasized.

Without proper training and awareness, women entrepreneurs may remain excluded despite the availability of digital tools.

Policy Recommendations

To address these challenges and unlock opportunities, the researchers recommended several policy interventions:

1. Revisiting Lending Practices: Banking supervision and loan evaluation criteria should be reviewed to reduce gender-based disparities in credit allocation.
   
2. Digital Adoption Schemes: Special government-backed initiatives could encourage women entrepreneurs to adopt digital financial technologies.
   
3. Targeted Funding: Dedicated funds and incentives should support women-led enterprises in the unorganized sector, ensuring equal access to growth capital.
   
4. Financial Literacy Campaigns: Awareness drives and training programmes are essential to equip women with the skills needed to use digital financial platforms effectively.
   

A Way Forward

The study’s findings highlight both a challenge and an opportunity. On one hand, entrenched gender bias in access to credit continues to hold back women entrepreneurs. On the other hand, digital finance offers a practical, scalable solution to bridge this gap—provided it is supported by education, policy, and inclusion efforts.

Women entrepreneurs represent one of India’s greatest untapped economic resources. By ensuring equal access to credit and promoting digital financial inclusion, India can unlock their potential, fueling innovation, job creation, and long-term growth.

As digital finance becomes more widespread, the hope is that the gender credit gap will continue to narrow—bringing India closer to its vision of inclusive and equitable economic progress.