Challenge: Lack of confidence or hesitation to approach financial institutions
Challenge:
Women entrepreneurs tend to have less experience with banking institutions and could feel intimidated to approach a bank. Poor financial literacy often translates into inadequate accounting and financial management functions.
Intervention:
We possess a three-step approach to address this challenge: Preliminary financial knowledge imparted across training programmes, doorstep service and providing information for access to institutional finance and making them self-confident and boosting their morale to help them
Challenge: Lack of reliable information
Challenge:
Due to inadequate financial knowledge, women-owned enterprises do not always maintain necessary financial documents. This makes them less attractive to financial institutions.
Intervention:
We have promoted relaxed KYC norms and also are encouraging the sustenance of cash flows at the individual level by promoting savings etc.
Challenge: No customisation of products/services to suit woman entrepreneur needs
Challenge:
Banks rely on personal track records when reviewing loan applications. In the case of women, these are often not strong enough as women entrepreneurs lack proper records/documents. There has been little effort by financial institutions to understand this sub-segment or design customised products.
Intervention:
We have designed our products based upon the serving the needs of our customers and their repayment capacity. We have also ensured to provide financial assistance at every step, enabling business enhancement.
Challenge: Bank branches appear unwelcoming
Challenge:
One criticism expressed by women entrepreneurs is that bank branches have few women relationship officers and an unwelcoming environment.
Intervention:
We have established the concept of providing banking services at the doorstep through our business correspondent model. This has also helped in bridging the gap between banks and women entrepreneurs. Besides, the awareness level and financial knowledge is also on the rise.
Challenge: High transaction costs
Challenge:
The average finance needs of men-owned enterprises are more than that of womenowned organisations. The cost of administering and servicing small loans to women entrepreneurs is relatively high due to similar processing and documentation requirements for enterprises regardless of size. The credit risk assessment process, generally complex, is the same for small or large loans. Banks tend to focus on clients with larger loan demands.
Intervention:
We are accessing clients as a group (SHG) and hence, the transaction cost reduces per individual. This has also allowed us to reinforce our scale of perations.
