Legal Guide

The Changing Scenario Of Money Market Has Helped The Women

From the ancient days women all over the world had limited access to the money market. However, governments from all over the world have tried to eradicate this problem once and for all primarily for the reason that a significant portion of the small and medium sized businesses is owned by women. They need money to run their business and therefore it is high time a few changes are made in the money lending policy.

Different solutions have been formulated over the years across the globe to help women get loans and financial assistance so that they do not have to spend their lives on grants, parent’s and husband’s favors and other demeaning ways.  

If you want to understand why this disparity and the issues that are underlying in the access of women to get a loan or even open up a bank account you will have to understand the context of problems of the developing world as a whole.

  • About 60 percent of the population of the developing countries does not have formal lenders. This result in these countries lagging in economic and financial inclusion and the capital markets has comparatively limited external financing options.
  • However, the national credit information systems are developing and it does not usually include non-bank microfinance providers. In most of the cases the lenders have to rely on collateral. This makes it even more expensive to register and in most of the times these are not easily enforceable.
  • According to the Global Partnership for Financial Inclusion and IFC, are considered to be low value-added sectors being smaller and informal firm owners. They are also considered as a small contributor as far as returns to the creditors are concerned. Such consideration though discriminating impedes the access to finance for women entrepreneurs.

You can learn more at our site how microcredit can be useful in expanding financing access and options for the poor, especially women. This means that the needs of the SMEs are not fulfilled and women entrepreneurs wanting to expand their businesses do not have the opportunity to exceed the micro-credit ceilings. That in simple words mean women entrepreneurs are unable to secure any formal financing that will help them to grow their businesses.

The need for increased access

There is an immediate need to increase the access of women owning SMEs to financial services. The need is so profound that it is recognized by the G20 Finance Ministers as well in 2012. Ministers now highlighted the key trends, opportunities and challenges for promoting women’s entrepreneurship in a global basis. The powers that be realized that there are gender biases in both fields such as access to finance as well as the growth of businesses owned by women.

It is therefore decided by the different governments that women should be given the right to access loans and credit to own property, assets or for the growth of their business as well. they must have the full right just as any male to enter into legal contracts with the financial institutions and banks.

However, to change this law there must be a few changes made to other laws as well that are equally gendered such as labor laws and personal status laws. All gender-specific provisions that influence business growth must be changed.

One example how these laws may affect the ability of women to access financing is the way wherein property arrangements or inheritance law affect a woman to use their property as collateral. The woman may be legally eligible to use the property but in practice the house deeds will be with the husband. This prevents the woman using the same property as collateral.

The money lending policy of commercial banks also creates a non-legal procedural barrier. For example, women wanting financial access or assistance may need to include their husband’s name as a co-signer.

Need for personal banking relationship

Being a woman makes it all the more difficult to bring a bank on board when women owned SMEs want to expand but this can be resolved if there was an increased personal relationship with the bank. This will make it easier for the women to get loans based on a solid personal relationship. There will be no outright discrimination in giving loans and will become real partners with women business owners.

Banks will be more caring and supportive if a relationship is built through different smaller and bigger transactions. Therefore, it is high time to build personal banking relationship rather than relying on an impersonal tie up where women can only save their money and not get any financial support separately. More than a transactional approach, banks need to focus more on building relationships with their women customers.

That means the banks and money lenders should start taking equal risks while lending money considering all customers as ‘clients’ and not discriminate them on gender basis. It is high time that they come out of the false notion that doing business with women is riskier as risks in a business do not come considering the gender of the owners.

The current transition

The current changes that are taking place in the money market are providing a great opportunity for the economic growth for the country. This is fostering entrepreneurial environment providing a strong platform for growth and innovation especially for the middle income economies. The changes have resulted and will further result in the following:

  • It will generate more employment
  • Address the development challenge
  • Provide growth to business
  • Increase contributions to the national economies and
  • Identify real solutions to expedite business growth.

Most importantly, it will reduce the need of meeting the capital needs of their businesses through personal sources such as personal savings and loans from family.

Therefore, without any doubt the changes in lending policy and laws have created a positive impact in women’s access to finance creating a supportive ecosystem. This ecosystem includes governments and lending institutions, women’s business associations and international financial institutions, along with non-governmental organizations as well. This will continue to empower more women to start, grow and sustain their businesses.

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