How Fintech Boosts Women Participation The rising interest of women in loans could work wonders with regulators and lenders putting the necessary enablers in place

Over the years, we are witnessing the change in overall women centric growth. For instance, if you live in cities, you may have noticed the two-wheeler revolution some years ago—a visible surge in the number of women two-wheeler riders. A gearless two-wheeler liberated women living in narrow lanes of busy cities or towns. They allowed women to commute easily despite their home-to-workplace routes being poorly served by public transport.

Just like that, financial services are set to witness a women-centric revolution. Focusing on mobile banking and easy-on-phone services by fintech companies has brought more women into the financial services fold.

The share of women borrowers in overall loans grew to 28 per cent in 2020 from around 14 per cent in 2014. As many as 39 per cent of the women borrowers are from three states Maharashtra, Karnataka and Tamil Nadu. Women are primarily using personal, consumer durable loans and credit cards. A key outcome of the survey by Trans-Union CIBIL is that women are better borrowers than men. Their average credit score is higher than men's.

Let us drill down each of those observations further.

The increase in the number of women borrowers is a very productive development. India needs to recognise the contribution of women to the nation's productivity. As more women get to work and become a part of the formal financial system, it will add to the nation's growth. As nation's grow, consumer spending drives and propels that growth further. Women will play a significant role as more can manage their finances than earlier.

For now, the concentration of women borrowers in relatively affluent states. However, as more women from densely populated states like Uttar Pradesh and North India get work, they would drive consumer credit growth. Fintech companies would be crucial in reaching out to women with easy-to-access credit. Many women now own smartphones and bank accounts more than ever. That should help in expanding the scope of financial services into the heartland.

If women in relatively more affluent states like Maharashtra, Karnataka and Tamil Nadu are better borrowers, there is no reason why that cannot be the case across India. That should encourage regulators and lenders to reach out to them.

A lot is going on from the regulators' and lenders' perspectives. Lending guidelines also promotes lending to women borrowers. Loans to women can qualify for priority sector lending for banks and non-banks. The pricing of these loans also favours women. The institutional and regulatory infrastructure is geared to welcome more women borrowers.

As the matter of fact, very few women own homes in India. Thus, home loans are not the significant market for women as of now. This must change as India needs more women home loan borrowers. There is a need to encourage women to own homes. Regulators have allowed incentives to encourage women to borrow for their own homes.

That makes sense for a market where household debt is around 38 per cent of GDP. There is further scope for credit growth without affecting key macroeconomic factors. In most rich countries, household debt is over 100 per cent. That is perhaps the other extreme.

The rising interest of women in loans could work wonders with regulators and lenders putting the necessary enablers in place. In India, there is a path of growth ahead that awaits credit market expansion and fintech are leading in driving this revolution.