Women, SC/STs entrepreneurs can now get up to Rs 2 crore loan
New Delhi, Feb 1, 2025
Finance Minister Nirmala Sitharaman presented the Budget 2025-2026 on February 1
In the 2025-26 Budget, Finance Minister Nirmala Sitharaman announced on Saturday a scheme offering Rs 2 crore for first-time women entrepreneurs, Scheduled Castes, and Scheduled Tribes.
"For 500,000 first-time entrepreneurs, including women, ST and SCs, a new scheme, to be launched, to provide term loans up to Rs 2 crore during the next 5 years," FM said.
"The Rs 2 crore loan support scheme for women entrepreneurs from SC and ST communities is a commendable initiative aimed at bridging the funding gap faced by marginalized groups. However, to maximize its impact, the government should also consider implementing mentorship programs and skill development initiatives," said Ketan Mukhija, Senior Partner, Burgeon Law.
Prateek Bansal, Partner, Taxation at White & Brief Advocates and Solicitors added, "Care should be taken that the loan support scheme provides loans with minimum risk of recovery to ensure that NPAs are under control."
"The announcement is a transformative initiative reminiscent of historical milestones in economic empowerment. Much like the microfinance revolution that empowered countless women across developing nations, this scheme aims to break barriers and create a level playing field for marginalized groups," said Nilesh Tribhuvan, Managing Partner, White & Brief Advocates and Solicitors.
"This initiative draws parallels with the transformative policies of the Green Revolution, which revolutionized India's agricultural sector by providing critical support to farmers. Similarly, this scheme is poised to catalyze a wave of women-led businesses, driving regional development, job creation, and inclusive growth," said Tribhuvan.
The World Economic Forum finds India slightly improving in gender parity ratio, though it still ranks low in the Global Gender Gap Report, with economic status widening the gap in women's equality across different spheres.
According to an IFC report published in 2022, about 90% of female entrepreneurs in India had not borrowed from a formal financial institution. During the 2020 lockdown, 72% of female-led enterprises lacked financial reserves compared to 53% of male-owned businesses.
Women in India receive credit equal to just 27% of the deposits they provide, while men receive credit equal to 52% of their deposits. This difference could be linked to financial institutions not granting credit evenly to women.
Another challenge for women entrepreneurs is limited access to professional networks. A Google-Bain survey found that 49% of respondents reported a lack of professional support due to restricted inclusion in formal and informal networks.
Beyond financial barriers, societal expectations place additional pressure on women. They are often expected to manage responsibilities at home while excelling in their professional roles. This dual burden affects their efficiency and business growth.
Existing support options for women
Mudra Yojana
A government initiative to support micro and small enterprises, with a special focus on women entrepreneurs. Loans up to Rs 10 lakh are available with no collateral, and women receive lower interest rates.
Stand-Up India Scheme
Provides bank loans between Rs 10 lakh and Rs 1 crore to at least one SC/ST borrower and one woman per bank branch for setting up a greenfield business. For non-individual firms, a SC/ST or woman entrepreneur must hold at least 51% ownership.
Prime Minister’s Employment Generation Programme (PMEGP)
Offers financial assistance for new micro-enterprises and small businesses, promoting self-employment among women.
Udyam Shakti Portal
Launched by the Ministry of MSME, this initiative promotes social entrepreneurship by providing business planning assistance, incubation facilities, training programmes, mentorship, and market research. Projects costing up to Rs 25 lakh are eligible, with Rs 10 lakh allocated for service-based ventures.
Economic Empowerment of Women Enterprises and Start-ups by Women
A Ministry of Skill Development and Entrepreneurship scheme offering incubation and acceleration support for female micro-entrepreneurs. It is currently operational in Assam, Rajasthan, and Telangana.
[The Business Standard]
