1.Introduction
About FinAGG: FinAGG Technologies Pvt Ltd is a leading digital supply chain financing provider in India. Our mission is to empower 4% of Indian MSMEs by providing seamless access to working capital credit through innovative digital solutions. We collaborate with major enterprises such as ITC, HUL, Whirlpool, Godrej, Pidilite, and financial institutions including HDFC, Jana SFB, Tata Capital, ABFL, and UGRO. Our offerings encompass a fully digital journey, advanced credit underwriting, customised embedded finance solutions, and broad lender coverage. This comprehensive approach allows us to deliver efficient financial services across various tiers of the supply chain
Importance of Financial Inclusion for Women Entrepreneurs: Financial inclusion is vital for economic growth and social equity. By providing women entrepreneurs with access to credit, we can drive significant positive change in communities, foster economic independence, and reduce gender disparities. The Nari Shakti Program is a testament to FinAGG’s commitment to this cause, aiming to empower women entrepreneurs through enhanced credit facilities.
2. Challenges Faced by Women Entrepreneurs in Accessing Capital
Women entrepreneurs in India face several challenges when it comes to accessing capital and funds.
1. Lack of Collateral: Many women entrepreneurs do not have ownership of significant assets that can be used as collateral for loans. Traditional lenders often require collateral, making it difficult for women to secure financing.
2. Limited Financial Literacy: Financial literacy among women entrepreneurs is often low, which hampers their ability to understand and navigate financial products and services effectively.
3. Gender Bias: Gender bias and societal norms can influence lending decisions. Women entrepreneurs may be perceived as higher-risk borrowers, leading to lower approval rates and less favorable loan terms.
4. Inadequate Access to Networks: Women entrepreneurs often have limited access to professional networks and mentorship opportunities, which can be crucial for securing funding and growing their businesses.
5. Informal Sector Challenges: Many women-led businesses operate in the informal sector, which lacks the formal documentation and credit history required by traditional financial institutions.
6. Higher Interest Rates: Even when women entrepreneurs do access credit, they may face higher interest rates compared to their male counterparts, further increasing their financial burden.
7. Insufficient Government Support: While there are government schemes aimed at supporting women entrepreneurs, awareness and accessibility of these programs remain limited.
3. Impact Achieved
Specific Impacts Observed from Financial Inclusion through Supply Chain Invoice Financing:
1. Economic Empowerment: Women entrepreneurs have reported increased income and business growth, with targeted initiatives helping them scale their operations sustainably. The business must be registered under GST.
2. Job Creation: The Nari Shakti Program has created over 36,886 jobs for women, contributing to local economies and supporting community livelihoods. The business should have been operational for at least 1-2 years.
3. Community Development: Enhanced social status and financial independence for women have led to positive changes in their communities, promoting gender equity and empowerment. A certain turnover is required to qualify for a GST loan.
4. Broadened Financial Inclusion: Extensive efforts to include women without previous banking relationships (NTB) alongside those already banked (ETB) have significantly increased access to financial services. This initiative supports financial democratisation, allowing women from various backgrounds to start or expand their businesses. A good credit score improves the chances of loan approval.
Examples or Data Highlighting Success and Challenges:
Success:
Interest Rates and Repayment Tenure
FinAGG has since inception provided credit facilities to 18,443 (as on June 2024) women entrepreneurs, directly impacting 110,6581 women and creating 36,8862 jobs.
Significant strides in onboarding women entrepreneurs who are new to banking (NTB), as well as continuing to serve those existing to banking (ETB), with the following quarterly data:
Challenges and Solutions
a. Overcoming Cultural Barriers that Inhibit Women's Access to Financial Services
1. Challenge:Cultural barriers often prevent women from accessing financial services.
2. Solution: Conduct community outreach programs and awareness campaigns to educate communities about the benefits of financial inclusion for women.
b. Improving Financial Literacy Among Women Entrepreneurs
1. Challenge:Many women entrepreneurs lack the financial literacy needed to make informed decisions and manage their finances effectively.
2. Solution:Organize financial literacy workshops and offer online courses tailored to the specific needs of women entrepreneurs.
c. Ensuring Equitable Access to Credit for Women in Remote and Underserved Areas
1. Challenge:Logistical and infrastructural issues hinder equitable access to credit for women in remote and underserved areas.
2. Solution:Partner with local NGOs and community organizations to reach remote areas and provide mobile-based financial services.
4. Strategic Vision and the Why
Long-term Expectations and Vision for Financial Inclusion of Women Entrepreneurs:
FinAGG envisions a future where women entrepreneurs have equal opportunities to access financial resources, enabling them to grow their businesses and contribute significantly to the economy. Our short-term goal is to provide credit to 100,000 women entrepreneurs by the end of FY 25-26, creating a robust ecosystem that supports women-led enterprises and fosters sustainable growth.
Contributions from Other Impact Investors: Impact investors can contribute by:
Providing capital to scale initiatives.
Sharing expertise and best practices.
Advocating for policies that support financial inclusion.
Partnering with FinAGG to develop innovative financial products tailored for women entrepreneurs.
5. Strategic Partnerships
Strategies and Partnerships to Reach 100,000 Women Borrowers:
• Strengthen Collaborations: Partner with more financial institutions, enterprises, and NGOs committed to gender equality.
• Leverage Technology: Utilise our digital platforms to streamline the credit process and reach remote and underserved areas.
• Capacity Building: Offer training programs to enhance the financial literacy and business skills of women entrepreneurs.
Key Stakeholders and Effective Partnerships:
• Financial Institutions: Banks and NBFCs providing the capital and financial products.
• Enterprises: Partner companies integrating our solutions within their supply chain.
• Government Bodies: Supporting policies and regulations that facilitate financial inclusion.
• NGOs and Community Organizations: Facilitating outreach and support for women entrepreneurs.
6. Accessibility of Borrowing Process
Measures to Make Borrowing More Accessible for Women:
• Simplified Application Processes: FinAGG has minimized documentation requirements and offers multilingual support to cater to diverse backgrounds.
• Digital Onboarding: Our digital onboarding system is designed to be user-friendly and efficient, reducing the time and effort required to access credit.
• Customised Products: We plan to develop financial products that cater specifically to the needs of women entrepreneurs, such as flexible repayment options.
Steps to Further Simplify and Streamline Application and Approval Processes:
• Automated Systems: Implement AI-driven credit assessments to expedite the approval process.
• User-Friendly Interfaces: Design intuitive interfaces that are easy to navigate for non-technical users.
• Customer Support: Provide dedicated support teams to assist women entrepreneurs throughout the application process.
7. Internal Systems and Filters
Filters and Internal Systems Needed to Reach More Women-Led Businesses:
• Targeted Marketing: Implement marketing strategies that specifically target women entrepreneurs by analysing demographic data and business profiles to identify potential borrowers. Utilise digital marketing channels and partnerships with women-focused organisations to effectively reach and engage this demographic.
• Training and Development Modules / Platform: Provide training on financial management and business development to women entrepreneurs, enhancing their ability to manage credit and grow their businesses.
• Risk Assessment Tools: Develop tools to accurately assess the creditworthiness of women-led businesses, considering factors unique to their circumstances, such as informal business operations and limited credit histories.
• Feedback Mechanisms: Implement systems to gather feedback from women entrepreneurs to continuously improve products and services, ensuring they meet the specific needs and challenges faced by women-led businesses.