After years of financial exclusion, NBFCs are playing a crucial role in bridging the gapread moreIn rural India, women are increasingly becoming aware of financial matters, but mere awareness is not simplifying their journey to financial freedom. They face many difficulties, including limited resources, little access to formal loans and social obstacles. Rural women have been limited by a system that methodically reduces their chance to grab fruitful opportunities, even for the ones with great potential. Based on research published by the World Bank in 2020, women in India receive a credit equivalent to only 27 per cent of the deposits they contribute. This startling number presents a dismal picture of the reality of many rural women’s lives. Lack of collateral, no official land ownership and often lack of formal education has left them out of the financial loop, unable to start or expand their companies. In this challenging situation, conventional banks prove to be futile as they need large assets for loans and that is something many rural women do not possess.AdvertisementFinancial exclusion: A systematic challengeFor years, financial exclusion kept rural women trapped in poverty, limiting them to low-income jobs or small-scale businesses like farming and handicrafts. These livelihoods often lack security and are vulnerable to external shocks such as price fluctuations or bad weather. However, change is underway. Non-banking financial companies (NBFCs) are reshaping how rural women access credit and manage businesses. By offering flexible financial services, NBFCs are bridging the gap left by traditional banks and creating new opportunities for women to expand their enterprises.NBFCs are an alternativeNBFCs offer loans with minimal documentation and no collateral, making financial access easier for rural women. Instead of focussing on land or property ownership, they assess entrepreneurial potential, business ideas, and community support. Small Finance Banks (SFBs), supported by NBFCs, provide low-interest loans for ventures such as organic farming, dairy farming, and small retail businesses, addressing gaps in financial services.This shift is already visible—around 40 per cent of rural Indian women entrepreneurs have moved beyond agriculture into areas like food processing, cattle farming, and handicrafts, according to the SME Finance Forum. Many are transforming raw agricultural products into value-added goods such as organic jams, pickles, and juices, creating opportunities to reach national and global markets. Access to working capital loans allows them to expand their businesses, hire workers, and invest in better equipment—options that were once beyond their reach.Beyond providing financial support, NBFCs are helping rural women access digital tools that make financial services more accessible. Mobile apps, web portals, and digital payment systems have eliminated the need to travel long distances to banks. Now, women can apply for loans, track repayments and manage business finances directly from their phones.AdvertisementDigital toolsThis digital shift is expanding their opportunities beyond local markets. Rural women are now selling products online, reaching customers they never could before. With NBFCs supporting digital literacy, they can diversify income sources, access global markets and achieve financial independence. This transformation is also reshaping rural communities.Successful women entrepreneurs create a ripple effect, benefiting society as a whole. According to NABARD, enterprises run by rural women in India have a 25 per cent higher sustainability rate than those managed by men. Women reinvest their earnings into their communities, improving education, healthcare, and overall welfare.After years of financial exclusion, NBFCs are playing a crucial role in bridging the gap. By providing access to capital and digital tools, they are enabling rural women to grow their businesses and secure their futures. With this support, women are not just sustaining their businesses but driving real change in rural India.AdvertisementThe author is Co-founder & Managing Director of SAVE Solutions Pvt. Ltd. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.More from India
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Are NBFCs supporting rural women in diversifying their businesses?
