This post was originally published on The Economic Times
To improve uptake by women, credit products must evolve—rethinking credit scoring, onboarding incentives, flexibility in collectivising and repayments, and loan formats. This article reflects on the initial findings from a study involving a cohort of thirteen fintechs developing products for women in India.
Rekha has been successfully running a small kirana shop in Chengalpet for over two years. She has been wanting to add mobile and small electronics to her list of items, but they are available on upfront payments. In the past, she had taken two small loans from a neighbour to set up the shop and expand stock. Both times, her bank refused her credit, citing zero credit history. The local NBFCs were willing, but only against gold collateral at punishing interest rates. She knows that electronics, in comparison to FMCG products, offer a far higher margin that could really boost her income. But, in the absence of the initial capital, adding them to her stock seems like an unrealisable dream.
Rekha is not alone. She is one of about 15 million women who own micro and small businesses in India, representing approximately 20% of all MSMEs (Micro, Small, and Medium Enterprises)
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