A recent survey reveals that 53% of women entrepreneurs in India prefer using gold as collateral to secure loans for their businesses, particularly in cities like Chennai, Mumbai, and Delhi. While gold is a popular asset, many self-employed women still favour personal savings over loans, indicating a need for enhanced support in accessing financing options.
Gold as a Popular Collateral
The survey, conducted by CRISIL and DBS Bank India, highlights gold’s significant role in funding among women entrepreneurs. Alongside property, gold is the most commonly used collateral for loans. The trend is most pronounced in Chennai, where nearly 52% of self-employed women opt for gold, compared to 22-25% in Mumbai and Delhi. Interestingly, only 11% of women in Kolkata use gold as collateral for loans.
Limited Preference for Bank Loans
The report also points out that just 21% of women entrepreneurs prefer bank loans to finance their businesses. This low percentage underscores the need for improved access to financial options for women in India. In major metropolitan areas, approximately 65% of self-employed women have not taken any business loans, with 39% relying solely on personal savings to fund their ventures.
Age and Gold Collateral Usage
The survey further reveals that the trend of using gold as collateral is particularly strong among female millennials. About 23% of self-employed women aged 36-45 utilize gold for this purpose, while the percentage is lower in other age groups.
The Rise of Digital Payments
The survey also highlights the growing trend of digital transactions among women entrepreneurs, thanks to initiatives like ‘Digital India.’ An impressive 73% of self-employed women prefer receiving payments digitally, while 87% utilise digital methods for their business expenses. The Unified Payments Interface (UPI) is a popular choice, with 35% of respondents using it to receive payments and 26% for paying business expenses. However, cash remains the preferred method for payroll and operational costs.
The survey showcases the pivotal role of gold in empowering women entrepreneurs in India, particularly as collateral for loans. Despite its popularity, there remains a pressing need to enhance access to financing options for self-employed women, along with supporting their transition to digital payment methods.
