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ANALYZING FUNDING OPPORTUNITIES FOR WOMEN STARTING SMALL BUSINESS IN RURAL INDIA
Executive Summary:
Here in this report, an attempt has been made to critically analyse the financing opportunities available for the women entrepreneurs working in the rural areas of India. The report starts with a detailed description of the social condition of women in rural as well as urban India in previous times as also in recent times. The report goes on to identify the development occurred in the social position of women in the country in recent times and how the concept of woman empowerment finds in place in the Indian society. The report successfully depicts how woman entrepreneurship has been chosen as the best possible alternative for empowering women in the truest sense of the term and for making them economically independent. The report gives stress on those women entrepreneurs who are working in the rural areas of India.
The main part of the report extensively deals with the funding opportunities available for the women entrepreneurs working in the rural parts of the country. The report specifically mentions how public sector banks formulate schemes for women entrepreneurs in order to provide financial assistance to them. The report also includes a detailed description of how the Government of India has formulated specific schemes for women entrepreneurs. Besides providing monetary help, the government offers various other facilities like building proper physical infrastructure for the women entrepreneurs and conducting proper marketing initiatives in order to place their products in the market through these schemes. A description of this also finds its place in the report. The report also illuminates the significance of micro finance companies in providing specific help to the women entrepreneurs working in the remotest parts of the country. At the concluding part of the report, a vivid evaluation of the scope of woman entrepreneurship available in Bangladesh has been attempted in order to make a competitive study between the woman entrepreneurship possibilities in Bangladesh and that of India.
Table of Contents
1. Introduction: 4
2. Background to the Study/ Investigation: 4
2.1 Women Empowerment: 4
2.2 Women Entrepreneurs: 5
3. Main Findings and Discussions: 6
3.1 Small Business Loans from Banks for Women Entrepreneurs: 6
3.2 Governmental Support for Women Entrepreneurs: 11
3.3 Financial Support Offered by Angel Investors and Micro Finance Institutions: 16
3.4 Scope of Women Entrepreneurship in one of the Neighbour Countries of India: 20
4. Conclusion: 24
Reference: 26
Appendix: 30
1. Introduction:
Modern sociology gives stress on women empowerment. It is needless to say that women are the backbone of any civilized society and their individual liberty should be ensured by the male counterparts of the society. In India, the social status of women has followed a downward trend in the past. But in modern India, women have been given due recognition and attempts are made to liberate them from social inequalities. Both in urban and rural areas of India, women are now encouraged to stand in their own feet. Women empowerment finds its incarnation in women entrepreneurs, especially of rural India, who have the guts and strong will to establish a business with the help of their own capability (Jitendra, 2013). They are trying to build up small scale industries in rural India so that middle and lower class women of rural areas can find earning opportunities. Women entrepreneurs are trying to involve a small group of women in their attempts to establish a small business. But one of the most potential barriers that they have to face is the accumulation of fund for starting the business. As banks do not show interest in providing loans to them, women entrepreneurs have to rely solely on their personal savings. In a research it is found that nearly 60 % of the female entrepreneurs start their business with less than one lakh business capital and in order to collect this minimal amount they have to depend on their personal savings (Bhatia, 2000). Monetary support from banks and other financial institutions is not easily available for them. But in recent times the situation improves a bit as Indian government has stretched its hands of support for women entrepreneurs and several Angel investors are available to deliver financial support for establishing small and medium enterprises. Here in this report, an attempt will be made to critically analyze funding opportunities for women entrepreneurs trying to start a small business in rural India. Various funding options in forms of bank loans, governmental help and monetary help of Angel investors will be evaluated in a way to judge their effectiveness in encouraging women to become economically independent and free from social depravity.
2. Background to the Study/ Investigation:
2.1 Women Empowerment:
Women empowerment and women individualism have earned immense importance in the modern era. The history of the world shows that in earlier time women were the victims of social oppression and depravity. In a patriarchal social system, women were always forced to engage themselves in household duties. They were treated as a machine to produce children and were restricted to go and meet with the outside world. Women did not even get chances to educate themselves. The social position of women in the society at that time brought a picture of haplessness and suffering. Under the dominance of their male counterparts, women were deprived of a restriction free life and their economical independence was beyond question. With the appearance of the modern age, there is a thin ray of hope discernible for women. Society starts giving importance to women, they are given opportunities to educate themselves and establish themselves in life (Thakur, 2009). In India, the concept of women empowerment comes quite late. After sixty years of independence, India has just now started thinking of real independence for women. By removing the shackles of household responsibilities; Indian women are now being able to live their lives independently. Women individualism has now earned significance in Indian society. Besides educating them, women are now being given ample opportunities to earn their own livelihood and live their lives without the guidance of their male counterparts. The social conditions of women residing in urban and rural areas highlight a picture of stark contrasts. Where women from urban areas of India have got ample facilities to liberate themselves, the women of rural areas are still becoming the victims of social injustice (www.ifad.org, 2014). But by standing at the threshold of 21st century, women of rural areas can at least find solace in the fact that a good number of women from rural India are relentlessly trying to fight against social inequalities and claiming equal social position with men. They adopt a mission of women empowerment by giving Indian women, especially of rural areas, a chance to earn their own livelihood and become independent.
2.2 Women Entrepreneurs:
Women entrepreneurs, who are working at the rural level, are trying to establish small businesses in order to give the lower middle and lower class women of rural areas an opportunity to become economically independent and stand as a support to their fathers, husbands and brothers. Small scale industries of rural areas include businesses of pickle manufacturing, embroidery works, handicrafts, household goods producing and agro products. In order to start the above said businesses, women entrepreneurs do not require a huge amount of money. But unfortunately enough, they often find it difficult to accumulate this minimal amount of money to start the business (Goyal and Prakash, 2011). As monetary support of banks and governmental organizations are scarcely available, women entrepreneurs have to utilize their personal savings as a start up business capital. But in recent times, government has placed its focus of attention on small enterprises run by women entrepreneurs in rural India and announced certain supportive measures for them. In order to encourage the women of remote areas to start small scale industries which will provide job and income opportunities for others and will strengthen rural economy, Government of India, along with the Reserve Bank of India (RBI) has formulated several schemes. These schemes will not only provide monetary support to them, it will also help them to develop organizational infrastructure required to start their businesses. The announcements of special support to women entrepreneurs done by the Government of India will not only encourage the women of rural areas to start small businesses in their locality; it will also attract other investors to invest in rural economy (Lathwal, 2011). An example of it can be found in cases of Angel investors which are privately owned funding organizations offering help to women entrepreneurs. By following the footmarks of the Angel investors of US, several investors have concentrated their attention to the Indian rural market.
3. Main Findings and Discussions:
3.1 Small Business Loans from Banks for Women Entrepreneurs:
Of late, the Reserve Bank of India (RBI), the supreme banking authority of the country, has imposed enough importance on the economic empowerment of women, especially of those living in the rural areas of the country. In order to encourage women entrepreneurs to establish small scale industries in the remote parts of the country, RBI has announced special monetary benefit for them. It has launched a special privilege scheme for the women of rural areas named Swarnajayanti Gram Swarozgar Yojana- Aajeevika in November, 2013. Under this scheme, RBI has directed various public sector and nationalized banks to offer small business loans to those women who are trying to build up self-help groups for the economic empowerment of women residing in rural areas. RBI has strictly imposed a ceiling on the interest rate at 7% per year for the above said loans (www.iosrjournals.org, 2013). It has decided to offer loans to women entrepreneurs at a subsidized rate of interest with a vision to improve rural economy. Another notable effort is shown by the Small Industries Development Bank of India (SIDBI). It has implemented exclusive scheme for women entrepreneurs. Under the scheme named the Mahila Udyam Nidhi (MUN), the bank has decided to offer equity support for women trying to establish projects in small sectors. Another eminent support scheme namely Mahila Vikas Nidhi makes an attempt to provide loans to women of rural areas who want to start business ventures in the fields of knitting, block printing, spinning, weaving, embroidery products and handloom handicrafts. Way back in 1993, a governmental decision was made to build up Rashtriya Mahila Kosh with a vision to provide micro credit for economically backward women with a reduced rate of interest, minimal loan processing cost and easily understandable loan disbursement process. Since its inception, Rashtriya mahila Kosh has successfully performed its responsibilities and has granted loans to numerous poor women (Singh and Raghuvanshi, 2012). Till today, it hasn’t lost its popularity among rural women a bit. All the above mentioned schemes and those which are yet to come are formulated with a target to provide exclusive help for women entrepreneurs. Thus these schemes use to come with certain predefined conditions. For example, a specific precondition can be highlighted which says that the benefits of those schemes specifically designed for women entrepreneurs can only be availed if the concerned organization asking for monetary help can show that more than 50% ownership of the organization is under the possession of an woman.
In order to continue the discussion, it is necessary to mention the significant attempt made by the Oriental Bank of Commerce. The bank has launched a specific scheme named Orient Mahila Vikas Yojana in which it offers loan to women entrepreneurs up to 10 lakh without even asking for any collateral security (Saxena, 2012). The bank has rightly observed that Indian women, especially of rural areas, do not possess assets and properties in their own names. Except gold ornaments, all the properties and assets of an Indian family use to be looked after by the head of the family which happens to be their father or husband. So it is always difficult for a woman to give certain collateral security while trying to apply for a loan. By identifying this problem, the bank has decided to grant loans to women without any security and even decided to offer 2% discount in interest rates under the same scheme. United Bank of India, another popular bank of India, has launched Priyadarshini Yojana under which it waived collateral security in case of loans to women entrepreneurs up to 5 lakh and for small scale industries it offered special discount on the rate of interest. The discount varies from 0.5% to 1%. The State Bank of India (SBI), one of the dominant Indian banks, have announced a special scheme for women namely Stree Shakti in which it asks for no collateral security for a loan amount up to 5 lakh (Nandanwar, 2011). Both SBI and Canara Bank have implemented an innovative idea of introducing special divisions for women entrepreneurs where besides giving monetary support to them, women entrepreneurs are given specific training and helped to choose right path of business. They are even guided about the way in which they can place their products in the market. Canara Bank has even gone to that extent where it has decided to open bank branches in different parts of the country exclusively for women and names them Mahila Baking Division. This attempt of Canara Bank is declared as the first one in the history of Indian banking industry.
Andhra Bank has launched specific financial support plan for the women entrepreneurs under Mutual Credit Guarantee Scheme for Women. The scheme provides credit to the single eligible borrower involved in the micro and small scale industries in the rural India. The credit facility is available for manufacturing and service sector units, entrepreneurs involved in a retail trade will not be treated as eligible for the taking the loan. The bank has a provision of offering as much as 10 million rupees in the Indian currency and in order to apply for a loan, the applicant does not have give any collateral security (Dhameja et al. 2012). A borrower will be able to take the loan from the bank without any security for as many as five years. Another eminent public sector bank of India, namely the Bank of Baroda has formulated Akhshaya Mahila Arthik Sahay Yojna in order to extend its hands of support towards women entrepreneurs working in the rural part of the country. Under this scheme, the bank offers financial help to the self employed or professional women of the country and to those women who use to involve themselves in agriculture related trade or in retail trade. In contrast to the attempts made by the Andhra Bank, Bank of Baroda does not provide funding for women entrepreneurs without any collateral security or third party guarantee. The bank provides loan only after getting a proper asset declaration, no matter the assets are movable or immovable.
One of the oldest public sector banks of India, Central Bank, does not prefer stay behind others in formulating specific financial assistance scheme for the women entrepreneurs. The bank is successful in introducing Cent Kalyani scheme for the women entrepreneurs involved in different business sectors and trying to help the socially or economically deprived population of the rural India through their businesses. The bank has decided to make a reserve of 10 million in Indian rupees, so that it can provide financial support to the women entrepreneurs at any time they require it the most (Mann and Phukan, 2010). The bank has even decided to offer loans to women without any collateral security or asset declaration. Dena Bank extends its hands of support to the women entrepreneurs through its Dena Shakti Scheme for Women Entrepreneurs. The scheme provides extensive financial support to women involved in agriculture related trade, retail trade, and other small scale industries. One of the major advantages of this scheme lies in the fact that it provides monetary help to those women who involve themselves in housing or educational institutions. The bank offers term loans and working capital opportunities to the women entrepreneurs and puts a ceiling on the maximum credit limit at rupees 2 million (Singh, 2010). Punjab and Sind Bank has even tried to support women through its Udyogini Scheme. The bank has decided to provide loan to the women entrepreneurs having a small scale industry under their authority and even decided to offer financial assistance to the self employed and professional women. The bank tries to deliver loan only after analysing the need of the applicant, thus it provides only need based loan. For a loan amount up to 25,000, the bank usually does not demand any collateral security, but for a loan amount higher than that margin, the bank asks for collateral security.
Another highly popular nationalized bank namely the Punjab National Bank formulates an innovative financial assistance scheme for the women entrepreneurs under the brand name of PNB Schemes for Women. The bank has introduced a five layer loan structure in which it provides various support to the women entrepreneurs. The bank becomes a support system for those women entrepreneurs who are trying their hardest to build up infrastructure for their business or trying to accumulate initial investment. The bank has even decided to render concession to the socially or economically marginalized population. As far as the interest rate for the loan repayment amount is concerned, the bank offers 0.25% relaxation on the interest rate for the women entrepreneurs involved in the non-priority business sector and a 0.50% relaxation in case of the entrepreneurs involved in the priority business sectors (Reddy, 2008). The bank evaluates the priority of the business sectors purely on the basis of the self sufficiency of the business sector. The Punjab National Bank has rightly identified that for a woman entrepreneur trying to start a small business with a small capital in her hands it is almost impossible to bear the loan application fees that she needs to spend even before getting the monetary help of the bank. By following this concept, the bank has decided to waive half of the loan application charge for the women entrepreneurs and the scheme is effective from 12th August, 2011 (Usharao, 2012).
The State Bank of Mysore conducted a market survey before formulating its specific scheme for the women entrepreneurs. By following the results of the market survey, the bank finds that a majority of the women entrepreneurs in India is involved in food production and food delivery business, specifically in food catering business. Thus the bank has accordingly configured specific financial assistance scheme for the women entrepreneurs involved in the food catering business and gives the scheme the name Annapurna Scheme for Financing Women for Establishing Food Catering Units (Suguna, 2010). The bank rightly identifies that a huge business opportunity is waiting for the women entrepreneurs in the food catering sector and thus in order to encourage them in adopting the very trade, the bank has decided to provide financial assistance to them. It is the decision of the State Bank of Mysore that the bank will provide a maximum of 50,000 rupees as a loan amount to the women entrepreneurs trying to establish a food catering unit (Srinivisan, 2012). The bank prefers to deliver term loan to the applicant and that is also for a period of as many as three years.
At the concluding part of this long list of public sector banks providing monetary assistance to the women entrepreneurs working in the rural part of India, it is only fair to mention the name of the State Bank of Travancore. The bank tries to empower women in the truest sense of the term and tries to enhance the importance of a woman entrepreneur in a business by minimizing the impact of their male counterparts. The bank has categorically devised a women specific scheme namely Mahila Vikas Scheme in which it attempts to provide monetary assistance to those business organizations predominantly run by women. In order to become eligible for making an application for the loan, the bank has propagated certain strict norms failing which the applicant will not be able to gain the monetary privilege provided by the bank. As a prerequisite condition, a woman entrepreneur should possess more than 50% ownership of a business entity in order to become eligible for applying a loan under the aforesaid scheme (Tiwari, 2009). Another predefined condition brings to the fore the fact that a business entity must have a workforce comprising of at least 50% female employees. Only after satisfying the above mentioned conditions, a business entity can seek financial help from the bank under Mahila Vikas Scheme. The bank has decided to offer fixed term loan to the applicants for a maximum period of 60 months. It has even made a variety of options available in case of selecting loan amount ranging from 50,000 to 500,000 (Anitha and Sritharan, 2013). The entrepreneur can opt for any amount within the specified range as per his/her requirements.
The recent trend of the public sector banks in providing special benefit for women entrepreneurs reveal the fact that the bankers use to possess greater faith on women entrepreneurs than their male counterparts. It is the common conception of every banker that in case of women entrepreneurs, there is a greater chance of repayment of loan amount (Prasad and Varma, 2006). As women do not want to be defaulters, they perform the business in a calculated way and avoid taking financial risks. They use to make business plans well ahead of time so that they can repay their loan amount within the stipulated time frame. In spite of showing greater reliance on the women entrepreneurs, the public sector banks use to get a small number of loan applications from them. In order to identify the real reason behind this problem, a research was conducted by RBI. The result of the research reveals the fact that the women entrepreneurs show little faith on the public sectors banks due to its complexity in loan application process, time consuming operations, necessity of frequent visits to bank branches and a requirement of well structured business plan to be placed before applying for a loan.
3.2 Governmental Support for Women Entrepreneurs:
The Government of India, in recent times, has shown intention to offer help for women entrepreneurs. The formation of the Ministry of Micro, Small and Medium Enterprises proves to be a great help for female entrepreneurs trying to establish small scale industries in rural India. The government’s formulated Five Year Plans use to carry special benefits for women. The notable among them was the Seventh Five Year Plan (1985-1990) in which there was a special mention of creating special schemes for women entrepreneurs. The Government of India has also implemented Women Component Plan which conducts a monitoring process over the specific needs of women entrepreneurs (Lathwal, 2011). It offers a great source of help to them by offering the benefits directly to them no matter in which remote part of the country they reside. In a highly populated country like India where corruption is prevalent in every part of the administration, providing direct support to the actual needy is mandatory, otherwise there is a strong chance that the benefit will not be reached to the concerned person in full amount. Another governmental organization, whose name is needed to be mentioned here in this context, is Women Development Corporations. It is a state level organization with an aim to provide sufficient amount of help to women entrepreneurs in their arrangement of initial fund for starting business or in their attempts of placing their products in the market. The Ninth Five Year Plan gives birth to the Trade Related Entrepreneurship Assistance and Development (TREAD) scheme in which the Ministry of Micro, Small and Medium Enterprises makes necessary arrangements for the development programs of women entrepreneurs residing in rural as well as urban areas of the country (Saxena, 2012). The scheme stretches its hand of support to those women who are engaged in the business of non-agricultural products. Under this scheme, the Government of India uses to offer a monetary grant to the Non-Governmental Organizations (NGOs) supporting women entrepreneurship. The amount of the grant can reach up to 30% of the total project cost. The government even provides a grant of rupees 1 lakh for the training program of women residing in remote areas of the country. The government even makes provision for offering need based grant to them.
The willingness of government in helping women entrepreneurs is particularly discernible in its attempt to formulate innovative and useful schemes which aims at providing monetary as well as other forms of help to the women entrepreneurs working particularly in the rural areas of the country. The Ministry of Micro, Small and Medium Enterprises (M/0 MSME) of the Government of India constantly tries to configure effective schemes in order to empower women entrepreneurs. One such notable scheme formulated by the Ministry includes the Micro and Small Enterprises Cluster Development Programme (MSE-CDP). Under this particular program, the government has given women entrepreneurs an opportunity to face increased competition, adopt latest technological development, apply the best possible manufacturing procedures and conduct proper marketing initiatives for their products or services (Bahl, 2012). The government has rightly observed that the women entrepreneurs, especially those working in the remotest part of the country, usually get a very small market to sell their manufactured products or services. It is the duty of the government to make effective arrangements for them so that they can sell their products or services to a larger market and can pose a threat to the larger manufacturing organizations by becoming potential competitors of them. If the government can promote the products manufactured by the womenfolk of the rural areas in a proper way, the rural entrepreneurs will be able to invade large urban markets and will be able to compete with the larger manufacturing organizations.
The Ministry of MSME finds that the women entrepreneurs working in the rural part of the country seldom gets chance to access latest technologies. They are totally deprived of the knowledge that how technological innovations make effective changes in the manufacturing process and marketing initiatives of the business organizations of urban areas. The government should provide updated knowledge of latest technological innovations to the women entrepreneurs, so that they can make effective use of it. The Ministry of MSME decides to deliver extensive training to the women entrepreneurs working in the rural areas of the country regarding the effective use of latest technological machineries and tools in order facilitate the process of manufacturing products or conducting marketing initiatives (Das, 2010). The Ministry has taken the responsibility in its shoulder to literate rural entrepreneurs about how they can implement latest machineries in order to adopt the best possible manufacturing process. It also comes under the responsibility of MSE-CDP to teach them how to make fruitful use of latest internet technology and social networking sites in order to conduct proper marketing activity for their products or services. After knowing the proper utilization of the internet technology and social networking sites, the women of the rural areas will be able to create awareness of their products and services among a large number of customers, with the help of which they will be able to create a steady demand for their products in the domestic as well as in the national market. With the help of all these initiatives the government will be able to make improvement in the rural economy and by watching the success of women entrepreneurs of the rural areas many more women will feel interested in involving themselves in similar business ventures (Deshpande and Sethi, 2011). Creation of new business initiatives in the rural areas will undoubtedly help the government to create employment not only for the women of the rural areas but also for their male counterparts.
The main objective of the Micro and Small Enterprises Cluster Development Programme (MSE-CDP) brings to the fore the fact that with the help of the above said programme the Ministry tries to maintain an overall monitoring process on the very business approach of the women entrepreneurs. With the help of it, the personnel involved in this attempt will be able to provide assistance to the women in every business steps they make staring from the manufacturing of products to the delivery of the very products to the end users. In case of strong intervention, the Ministry of MSME is prepared to bear the liabilities of the women entrepreneurs which amounts up to as many as 90% of the total project cost.
One of the potential barriers that the women entrepreneurs have to face is the unavailability of physical infrastructure. The Ministry has decided to formulate Integrated Infrastructural Development (IID) scheme in 2011 for the entrepreneurs which will help them in their respective business by offering improved business sites with proper infrastructure (Jayasheela, 2014). Later the government has decided to merge this scheme with MSE-CDP, though all the characteristics of that scheme remain intact. By coming under the patronage of MSE-CDP, the IID scheme did not lose its significance a bit; instead it earns added importance and added value. The government has rightly observed that without the availability of a proper physical infrastructure, the women entrepreneurs will never be able to continue their business with ease. Thus the Ministry has formulated special benefits to those business units in which a woman entrepreneur has more than 50% ownership. In case of those business units, the government plans to provide monetary help in order to build proper physical infrastructure for the industry which amounts up to 80% of the overall project cost. A ceiling has been implemented at the maximum level of monetary help that a business organization can claim and it is fixed at rupees 8 crore (Kumar, 2012).
It is essential to shift the focus of attention to another governmental scheme formulated by the Ministry of MSME and the name of this scheme is Credit Guarantee Scheme (CGS). One of the major objectives of this scheme lies in the fact that it tries to maintain an uninterrupted credit flow for the micro and small business enterprises in order to avoid the risks of the entrepreneurs of being rejected by various financial organizations and public sector banks in providing financial support without security (Kumbhar, 2013). The government has rightly observed that in the rural areas, due to the non existence of public sector bank branches, women entrepreneurs finds it really difficult to get an opportunity of taking financial help from the banks. Even if they find a branch of a public sector bank in their vicinity, the complexity of loan application process and the heavy cost attached with it prevent them from taking the help from the bank at that particular time when they require it the most. In cases where the women entrepreneurs find the courage to surpass the loan application procedure and can bear the heavy cost they have to spend in order to complete the loan application process, they are finally rejected to give the financial help purely on the ground that they cannot be able to provide proper collateral security or asset declaration needed to get loan from public sector banks.
By analysing the social structure of the country, it is easily understandable that the patriarchal social system will never allow women to possess movable or immovable assets in their own names. Except the gold ornaments, they are totally deprived of the right of possessing an asset under their own authority. It is the social custom of India that allows the head of the family i.e. the father or husband of a woman to enjoy the right of being the actual proprietor of the family assets. In such a social system, it is almost impossible for a woman to provide proper asset declaration to the banks while thinking of starting a small business in order to become economically independent and to be free from social depravation (Massod, 2011). Even their male counterparts in the family will not stand as a third party guarantee to the banks to restrict them from being economically self-sufficient. In case of women residing in the rural areas of the country, the situation is more complex and unsolvable.
The Ministry of MSME shows its concern for the women entrepreneurs residing in the remotest parts of the country and makes specific arrangements for them so that they can get financial help under this scheme without any collateral security or third party guarantee. The security free lending facility will be given by the participating listed financial organizations of the Ministry. The organizations are called Member Lending Institutions (MLIs). The credit option is available not only for the existing micro and small business organizations run by a woman entrepreneur; the option is also wide open for new enterprises trying to establish their business with success. It is the decision of the Ministry that under the Credit Guarantee Scheme, the entrepreneurs will be given financial assistance up to 100 lakh (Memon, 2012). In case of a micro or small enterprise owned by a man, the guarantee cover exists up to 75% of the total loan amount. The Ministry’s added concern for the women entrepreneurs finds its incarnation in its attempt to provide extra benefit to women. Thus in case of a business unit owned by a woman, the guarantee cover is expanded up to 80% of the total loan amount (Razia, 2014).
The Government of India, in recent times, has stretched its hands of supports towards women entrepreneurs by providing ample opportunities of development. The same support of the government will be able to encourage more and more women to accept entrepreneurship as the most suitable alternative for them to become economically independent. In a recent effort, the government has decided to encourage the women entrepreneurs of the country to participate in the international exhibitions where they will be able to present a live demonstration of their products or services (www.journals.co-action.net, 2011). The exhibitions will give them the chance to create awareness of their products or initiatives on the international front. It can even create a ready demand for the products among the international customers. In order to boost up the women entrepreneurs, the government has decided to offer demonstration space in the international exhibitions absolutely free of cost and will bear the cost of travelling to a foreign ___location in an economy class arrangements in an international flight for one representative. All these facilities provided by the government come under Market Development Assistance (MDA) scheme, with the implementation of which the government expects that a large number of women living in the rural part of the country will feel interested in involving themselves in establishing small business within the periphery of their local areas (Rajendran, 2013). Their attempts will undoubtedly strengthen the rural economy of the country and the government will get an opportunity to empower the woman population of the country in the truest sense of the term.
The MSMED Act of 2006 proposed that a governmental authority should be formed in order to handle the issues rising out of the micro, small and medium business industries of the country. By following the suggestions of the Act, the government has formed a National Board for MSME (NBMSME). The basic function of the said board includes the responsibility of the board members to handle issues faced by the micro, small and medium enterprises of the country (Patil et al. 2011). In order to provide extra care to the issues faced by the women entrepreneurs of the country, the government has decided to include three associations of the women entrepreneurs in the said board. The inclusion of these three associations is believed to reflect a positive outcome by showing specific concern for the problems and adversities faced by the women entrepreneurs of the country.
3.3 Financial Support Offered by Angel Investors and Micro Finance Institutions:
Angel investors can prove to be an alternative source of monetary help for women entrepreneurs. The concept of Angel financing is a latest one invaded in the Indian business scenario, but within a short span of time it earns huge popularity as a dependable source for money lending (Choudhary, 2011). Among the Angel investors working in the Indian market, Unitus Seed Fund is the mentionable one. It is a Bangalore based financing organizations offering monetary help to those entrepreneurs living at the bottom of economic pyramid. It tries to give low income group of population a chance to have a better standard of life by encouraging them to establish small businesses. The organization shows faith on women entrepreneurs as it proposes certain facts which include that the organizations in which there is a greater participation of women discernible are successful to achieve higher levels of financial gain and the companies which have female co-owner reflect better success rate (Godwyn, 2009). Unitus uses to offer monetary help to those business organizations which will be able to serve at least one lakh families belonging to below poverty level within a span of 5 years. This precondition clearly shows that the company has equal concern for women entrepreneurs as well as for low income group of population.
Of late, micro finance institutions have gained importance among the rural population of the country. The institutions try to provide business loans at a low interest rate to the rural people in order to stage a fight against poverty and improve rural economy. As the Indian rural market is an unattended one by large financing companies, microfinance companies try to capture the rural market by offering special benefits to the rural population (Lalita, 2005). These companies provide an effective solution to the monetary demands of women entrepreneurs working in the rural areas of the country. Several micro finance companies offer effective support to women entrepreneurs. Among them, Activists for Social Alternatives (ASA) is a notable one which provides extensive financial support to the women of Tamil Nadu belonging to low income population. Asmitha is another micro finance organization which provides loan to rural women without taking any collateral security. Bandhan Micro Finance is a popular name among the women of rural India which is constantly working for the benefit of women. SKS India happens to be the fastest developing organization already being able to provide monetary support to more than 5 lakh women of rural India. (Refer to Appendix)
As rural entrepreneurship plays a dominant role in the socio-economical progress of the country, the microfinance companies rightly observe that a vast business opportunity is waiting for them in the rural areas of India. A small monetary help to the rural entrepreneurs, especially women entrepreneurs, will strengthen the rural economy to a great extent and at the same time will provide ample growth opportunities for the micro finance companies. The Self Help Groups (SHGs) in the rural areas are increasing their numbers day by day and in order to provide effective support to the newly formed SHGs, it needs to be ensured that they are getting proper assistance through microcredit (Sathiabama, 2011). As the public sector banks fail to open their branches in the remotest part of the country and the women entrepreneurs in the rural areas find it really difficult to get financial assistance from the banks, micro finance companies can only provide solution to them.
It is essential to note that micro finance companies do have certain functions to play and without their support the women entrepreneurs working in the remotest parts of the country will never be able to earn success in their businesses. One of the major advantages of micro finance companies lies in the fact that the employees of the companies reach to the poor and needy people of the villages, no matter in how distant places they live. On the contrary, the major limitation of the public sector banks brings to the fore the fact that the banks will never be able to reach to the households of the rural women thinking to start a small business by their own. Having the privilege of reaching to the remotest parts of the country with the help of their employee networks, the micro finance companies are able to offer small amount of loans to the rural women at a market competitive interest rate (Sengupta, 2011). The companies sanction loans of any amount, it is the preference of the entrepreneurs that how much money they require to start a new business or make improvements in the existing business. In case of rural entrepreneurs, especially women entrepreneurs, it is found that majority of the women entrepreneurs prefers to start with a very small business enterprise like manufacturing pickles, incense sticks or candle sticks. For this small business, they require limited financial assistance and going to a nationalized bank and asking for a small monetary help is nothing but a sheer wastage of time. Thus they prefer to take that help from the micro finance companies which sanction loans as per the requirements of the applicants, no matter how small the amount is.
The micro finance companies even deliver the privilege of offering financial help at a reduced interest rate for the economically backward population and socially reserved population of the country (Siddiqui, 2013). One of the most important advantages of the micro finance companies lies in the fact that they do not charge any loan application fee to the applicants. Public sector banks use to charge a loan processing fee to the entrepreneurs even before giving any financial help to them. The initial cost that the women entrepreneurs have to spend for applying a loan in the bank is almost out of the boundary of their financial ability. The micro finance companies provide a solution to those women entrepreneurs who do not have the capacity to bear the loan application charges of the public sector banks.
By conducting a research on the women entrepreneurs working in the rural areas of the country, one striking information comes to the fore that there is an availability of mediators who pose themselves as a great voluntary help to the illiterate or semi-illiterate women entrepreneurs of the villages and create link between the entrepreneurs and the banks (Srivastava, 2010). Though they claim that they do this help voluntarily without having any intension of getting economically benefitted from it, at the time when the applicant gets his loan amount from the concerned bank, the mediators befool them and extract a good amount of money from them. The poor entrepreneurs who make a plan to utilize the loan amount in their businesses fail to do the same because at the end of the day they do not have the amount of money they require for their businesses. In order to save the poor and illiterate women entrepreneurs of the rural areas from the evil grasps of the mediators, the micro finance companies decide to deliver the loan amount directly to the applicant (Tambunan, 2011). This decision of them will help the poor entrepreneurs to make full utilization of the loan amount and develop their business with success. Another important function of the micro finance companies lies in the fact that they develop a saving habit amongst the poor, backward population of the rural areas. They even play a major role in creating community leadership.
By analysing the data provided by NABARD, it is observed that the public sectors banks started extending their hands of financial support to the Self Help Groups (SHGs) from the financial year 1999-2000 (Telini, 2013). In 1999-2000 financial year, the banks provided help to as many as 81, 780 SHGs and the help compelled the banks to spend 135.91 crore for them. After passing several years, in 2008-2009 the banks increased the amount of their support to 12253.51 crore and provided help to as many as 1609586 SHGs (www.ifc.org, 2014). Considering the stiff increase in the numbers of newly formulated SHGs, it is essential to understand that the financial assistance provided by the public sector banks will not be enough to accommodate the huge demand of the country’s entrepreneurs. In this situation, it is necessary that the government should encourage the micro finance companies to stand by the side of the banks, in order to provide effective support to the entrepreneurs, especially the women entrepreneurs of the country.
3.4 Scope of Women Entrepreneurship in one of the Neighbour Countries of India:
Amongst the neighbour countries of India, it is essential to judge the scope of women empowerment available in Bangladesh. By analysing the geographical positions of the two countries, it is easy to understand that Bangladesh is the nearest neighbour country of India. Another important reason behind choosing Bangladesh for this research is that the respective social structure of Bangladesh and India bear certain similarity with each other. In both the countries, the social position of women still does not bring a happy picture. The women in both the countries become victims of social depravity and oppression. They are not even being given the chance to educate themselves. In recent times, the situation improves a little bit for the Bangladeshi women under the successful guidance of a woman Prime Minister. In the rural areas of the country, the illiterate or semi-illiterate womenfolk try to become self independent by involving themselves in new business ventures. With their economical independence, they try to provide support to their male counterparts in the family. Even the government leaves no stone unturned in encouraging the women residing in the rural parts of the country to involve themselves in establishing small business initiatives in their vicinity. The country’s Constitution also specifically mentions the need of the cultural, social and economical development of the women of the country. The article no 26, 27 and 28 of the Constitution of the People’s Republic of Bangladesh delineate the need and process of development for the women of the country (www.dhakachamber.com, 2014).
By following the suggestions of the Constitution, the Government of Bangladesh has formulated a National Action Plan (NAP) in 2003 in which it proposes its approach towards making the women of the country economically independent ones. The said plan clearly reveals what effective measures that the government is going to implement in order to encourage the women entrepreneurs of the country and to increase the number of women entrepreneurs in the rural areas of the country. Under NAP, the government vows to identify specific industrial policy for the women entrepreneurs. It has fixed a target of increasing the number of women entrepreneurs in the country by 35% within a fixed time frame of 12 years (www.dhakachamber.com, 2014). The government has rightly identified the need of educating the women of the country before making them economically independent. Without proper education, the women entrepreneurs will never be able to manage their respective business with success and will not be able to handle their financial investments properly. The government has also decided to provide them knowledge about entrepreneurship skills with the help of which they will be able to control the business part of their enterprises more effectively. Besides getting formal education, the study of entrepreneurship will make the women entrepreneurs more confident and more speculative about every business situation. In NAP, the government has also promised to make necessary arrangements in order to ensure that the women entrepreneurs working in the rural parts of the country will get an opportunity to place their products in the local as well as urban market with ease. They will enjoy a hassle free access to the markets. The government has even promised to provide proper physical infrastructure for the women entrepreneurs and effective knowledge regarding the utility of latest technological advancement in developing the business to a great extent (www.dhakachamber.com, 2014).
In spite of all these support initiatives proposed by the Government of Bangladesh, the women entrepreneurs of the country are facing obstacles while trying to open a small business by their own. The main obstacle that they are facing is coming in the form of difficulty in accumulating the initial capital for the business. As the women entrepreneurs do not have enough money in their hands to start a business, they need to take help from financial institutions in the form of a business loan. It is quite unfortunate that the nationalized banks of the country provide very little financial assistance to the women entrepreneurs of the country. The main cause of this problem can be traced back in the Industrial Policy 1999 of the Bangladesh government. In the said policy, no attempt was made to ensure that bank or other financial institutions of the country should make specific arrangements in order to provide monetary support to the women entrepreneurs of the country (www.dhakachamber.com, 2014). Under the impact of the policy, no financial institutions of the country shows concern in formulating specific monetary policy for the women entrepreneurs. Unlike India, the women entrepreneurs of Bangladesh derive very small help from their public sectors banks. Though Bangladesh Bank (BB) configured woman entrepreneurship specific policies, but its amount of help is not sufficient enough to meet up the huge demand of the entire women entrepreneurs of the country.
In Bangladesh, there is an existence of a specially developed bank and the name of the bank is BASIC. The bank has been formed in order to offer necessary help to the small businesses and cottage industries of the country. The formation of the said bank arouses great hope amongst the small entrepreneurs of the country, but since its inception in 1998 the bank is able to finance only 237 business projects of the country. The most pathetic news that it carries with it is that among the 237 business projects to which the bank offered monetary support, only two projects are there which are owned by a woman entrepreneur (www.dhakachamber.com, 2014). BASIC failed to deliver proper assistance to the women entrepreneurs of the country, so is the condition of other banks which have opened women specific bank branches in all over the country. Potential banks of the country like Sonali Bank, Janata Bank, Rupali Bank and Uttara Bank was successful in opening numerous women specific bank branches, but failed to provide actual monetary help to the women entrepreneurs of the country.
The situation in Bangladesh is not entirely frustrating for the women entrepreneurs. They have the opportunity of getting assistance from the vast network of eminent Non Governmental Organizations (NGOs) working in the country for the benefit of the poor and hapless population of the rural parts of Bangladesh. Among the most popular NGOs, Jatiyo Mahila Sangstha, Women Entrepreneurs Association, MIDAS, and Grameen Bank are mentionable (www.dhakachamber.com, 2014).
Jatiyo Mahila Sangstha started its journey way back in 1976 with a vision to create empowerment opportunities for the women of the country. The organization was able to launch a specific program for the women entrepreneurs of the country under the brand name of “Entrepreneurship Development of Women” in 1998 . Through the said program, the organization plans to formulate specific policies for the women residing in all the sixty four districts of the country. The main objective of the program is to take the women of the rural areas of the country out from poverty by offering them proper training, monetary help, supplying information and giving marketing support to their manufactured products. Under this very program, the organization has fixed a target of supporting as many as 7000 women entrepreneurs residing in the rural parts of Bangladesh within a stipulated time frame of five years. The organization has even disclosed that it has fixed a credit limit from Tk 30,000 to Tk, 1, 50,000 which it can offer to the women entrepreneurs of the country depending on their requirements and capacity to repay(www.dhakachamber.com, 2014).
Another eminent NGO of Bangladesh, Micro Industries Development Assistance and Services (MIDAS), is constantly trying to provide assistance to the women entrepreneurs of the rural areas of the country. The organization through its sister concern, MIDAS Financing Ltd, tries to provide enterprise financing to the young and energetic women entrepreneurs. A report published by the organization in October, 2000 in which the organization claimed that it has provided financial assistance to as many as 400 small enterprises owned by women entrepreneurs. Apart from providing monetary help to women, the organization is attempting to provide necessary training to the women entrepreneurs of the country and conduct marketing operations for their manufactured products. By understanding the importance of woman entrepreneurship, the organization gives birth to a secluded cell for helping the women entrepreneurs and names it Women Entrepreneurship Development (WED) Cell. It is the primary objective of the WED Cell to find out potential women entrepreneurs from the rural areas of the country and provide them monetary support so that they can establish a small business by their own. The Cell rightly observed that inspiring a woman entrepreneur in opening a small enterprise in her vicinity will not only help the woman to become economically independent, it will also create employment opportunities for more women residing in that particular locality (www.dhakachamber.com, 2014).
A discussion on the financing opportunities for the women entrepreneurs of the rural areas of Bangladesh would have been incomplete without a special mention to the Grameen Bank, a Nobel Prize winning micro finance organization of Bangladesh. Under the successful leadership of Professor Muhammad Yunus, the bank is able to provide micro credit to the women entrepreneurs of the rural areas of the country without any collateral security. The presence of Grameen Bank altogether changed the scenario for the women entrepreneurs of the country. Among the total number of beneficiaries who have got monetary help from the bank, 96% of them are women entrepreneurs. The extent of help it offered to the rural entrepreneurs of the country will not allow eradicating its name from the history of the country.
4. Conclusion:
In a highly civilized society, the social status of women should stay in a parallel line with that of men. The social standard of women can only be enhanced with the help of an attempt made in order to empower them. The process of women empowerment will be incomplete if they cannot be given ample chances to become economically independent. One effective way of getting economic independence can be found in case of women entrepreneurship. In a country like India where the women population still has to fight a lot to gain equal social standard with that of men, women entrepreneurship, especially in the rural areas of the country, should be encouraged in order to provide economic safety to the women. The women entrepreneurs in India find it difficult to gather initial fund for starting up a small business. Though in recent times various monetary benefits are offered by different public sector banks, by governments and by various private financing organizations in the forms of Angel investors or microfinance institutions, the benefits are not sufficient enough to satisfy the demands of all women entrepreneurs working in the rural areas of the country. Besides public sectors banks, private banks should also stretch their hands of support to the women entrepreneurs. For public sectors banks, it is advisable that they should open more branches in the rural areas of the country as the branches of the said banks are scarcely available in those areas. They should try to simplify the loan application process, so that more and more women entrepreneurs will feel interested to take loan from them instead of taking loan from any unauthorized local person at a high rate of interest.
By conducting a thorough comparison between the economic situation of the women entrepreneurs of India and that of Bangladesh, it is easily understandable that the women entrepreneurs of India are at a slightly improved position than that of their Bangladeshi counterparts. The result should not bring utmost satisfaction to the policy formulators of India. It is clearly discernible that improvements are still required in providing effective support to the women entrepreneurs of the country. The government has formulated several schemes for the benefit of the women entrepreneurs; it is now the responsibility of the government employees to monitors whether the schemes are properly implemented in reality or not. A proper audit should be made in order to judge whether the facilities provided by the government are reaching to the women entrepreneurs of the rural areas of the country or not. The government should be careful about the fact that corruption is rampant in every administrative layer of the country. The government should ensure that under the negative impact of corruption the women entrepreneurs of the country should not remain deprived.
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