Blockchain for Business: Bridging the Credit Gap For Women Entrepreneurs

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Ms. Sinha, thank you so much for joining me. So let me ask you a slightly broader question to start with. How difficult is it for women entrepreneurs to get loans today and what does it take for them and what do they have to go through to get a loan?

So whenever women entrepreneurs want to take a loan and as I'm assuming your question is that loan from the bank or a formal financial institution, right? So first of all, I mean, many times women would like to take a loan and you will also see that there is a lot of advertisement from the financial institution that, yeah, we want to give loan to women entrepreneurs. But then when women go to the bank, what are the things which she's been asked by the financial institution and she would not have the answers on?

So the first thing if women wants to take a loan for a business or for her enterprise which she's running, it's already existing, the bank will ask her, what is the collateral? Here we are talking about not micro credit loan or joint liability group loan. We are talking about micro enterprise loan.

It is an individual loan, not a group loan. So when it is an individual loan, the whole pressure of repayment is on the borrower. And generally banks prefer that if loan gets default, what are the assets she has which bank can take over?

So the first question bank asks her is that what is the collateral for the loan? And women do not have collateral because they do not own property, neither they own house. So they don't have ownership of any assets.

And because they don't have assets, that is the first question which they have no answer to it or they would say like, we don't have assets and they are denied. The second is, what is your credit score? What is your credit history?

Now again, here she doesn't have a credit score because first time borrower, right? So anyway, it's like a chicken and egg, that if I don't borrow, I don't have a history. And if I borrow first time without history, nobody gives.

And if I borrowed from informal sector, then there is no certification of that, which is valid for the formal sector. So in that way, she doesn't have any credit score or any credit history. That is the second.

And the most important, like in beginning, one would have that women need a lot of identities when she goes to the bank, like first of all, her own KYC. The second is the KYC of her own businesses. That is also very important, having Udhyamadhar and all.

So the own KYC of the business and then whatever business she is running, the licencing of those businesses. So bringing all together at one place, it is so challenging. And so you would see in India, even today, there are so many solo, 90% of the micro enterprise, which are owned by women, are women entrepreneurs.

I mean, totally in the ratio, it is that less than 15% of the micro enterprise are owned by the women, is one thing. And again, the loan or the women who get the loan from the bank is less than 13%. Less than 13% women get the loan for their own micro enterprise from the formal sector.

So majority of the women actually are left out. Majority of the women entrepreneurs who are or women who are owning the micro enterprise are excluded from the formal financial sector.

Right, and I'm going to come to blockchain in a moment, but tell us about your average customer. I mean, what are the kind of businesses they're running? What are they typically borrowing for?

So generally, when women set up the business, the one is that they need a working capital, which is so important. So when women decide to set up the business, the first obstacle is the social gender norms in the society where everyone will start from saying no. So if she's setting up the business, family will say you will not succeed not to start the business.

If she wants to like, you know, go for the marketing and all, she's not allowed. And even in spite of that, she wants to take a risk. Family will say that, OK, you are starting the business, but if there is any losses, don't come to us.

You may leave the house. So there is the first step when she's starting. There is so much of negativity everywhere, which she crosses with her own confidence and then she starts the business.

So our women with whom we are working, Mann Deshi Foundation is working and later on Mann Deshi Bank provides the loan. These women, they start the business from their household because they don't have any shops or they cannot even afford to do that. So these businesses are like catering business, paper cups, paper plate business, tailoring business, making pulses from the pulses, making dal, making cold press oil.

So variety of the business. So generally you will see women having a small business. It is in a fashion food, I mean, textile fashion and catering food, you say, or a catering business.

So these are the businesses which women do. And another very big business they do is running the grocery shops because they would buy some material and sell it. So these are the things they get into it and they do the businesses.

And when they do the businesses, they require a working capital to buy raw material and they also sometimes like if they are into manufacturing like paper cups and paper plates or anything, then they require a machinery. So that is like, you know, that little bit of capital cost and everything starts from home. Later on, if they grow their business and scale it, then they would think of separate ways.

But otherwise, the home is the starting place to start the business. And they require a finance. Yeah.

So finance is required for working capital or buying machinery. These are the two main areas and working capital for buying raw material and all that. And then if they're manufacturing something, so machinery for packaging, brandings, all those things.

So these are the things for which they require a finance.

Right. And tell us about where blockchain could help in. I mean, could blockchain wallets empower women? Could it reduce the administrative burden that is on the bank or those assessing the credit? Where do you see its role?

So let me tell you, I am not a technical expert. I don't know about like details of blockchain. But I would just say that, you know, working with women, we realise that how technology can play a role of enabler for these women who have actually missed their high school.

They have not been able to complete the education. But now there is an opportunity where they can get if they get an access to technology, then they can empower them. And that is how they can do it.

So in case of say, I'm talking about a woman like Lakshmibai, who runs the business of making dal from pulses, do the packaging of dal and sell it. Now, if she wants to start the business, the first thing and then she wants an access to capital for that business. What does she require?

Number one, she requires her full proof KYC, that is that her photo ID, her address proof, these things. Now, in a country like India, of course, we have Aadhaar. So Aadhaar is there, but her residential proof is required. So rational card is there. Then her Aadhaar has to be get linked to the phone. So she needs a mobile phone and smartphone is better.

So that is her, that is a part of her own KYC. The second thing then she requires is that, well, as I mentioned earlier also about the credit score or what assets she has, she does not have collateral. How will she prove that she has these assets?

So can we actually create, say, the whole bundle of her KYC, which can be digital and which can be placed on some public platform where the third party can consider it that it is authenticated. So that is one. So in that case, if she has a KYC and it is like in control, I mean, the privacy is there.

So the blockchain can help to place her KYC on that blockchain platform. The second thing which she requires is that credit score. Now, she has not taken a loan or she has not borrowed.

So she does not have any proof of or does not have a credit history. So what Mann Deshi has done is created a table, created a tool, which is credit rating tool, which gives all the details of that woman, her banking history, her transaction history, her business ID. Even when she has various licences, she has taken a course of her business, then certificate of that.

And all this can be tokenised and after tokenization, it can be placed on the blockchain so that the third party or I can say financial institution, they can consider that this is verified, authenticated and that can be on this platform. So if these documents, otherwise it's very difficult for her, it is scattered everywhere. But if these documents are placed on some tech platform, which we can say like on blockchain, which has a total control, sole control is owned by women, but at the same time, third party can actually verify.

Right, and in the beginning, you did say that amongst the hurdles that women face is the fact that they don't have collateral. There is no credit history. And then the whole KYC identity hurdle, which is, of course, challenging to get around. So if you were to look at, I mean, you already touched upon the areas where banking and technology are intersecting and how that can change things. But if you were to look ahead, let's say in terms of what your wish list could be in terms of, let's say, either access to loans or the speed at which they're dispersed, the reduction of paperwork. What are some of the areas that you're looking at as you look ahead?

So actually, if you see with women entrepreneurs, why they are excluded, it's not that, you know, they cannot run the business. It's not that they cannot repay the loan.

But they are excluded by these basic things. And these basic things, if with the blockchain, if we can address that solution and if they can get access to loan, the first thing happens is that there is a ease of getting the loan. Because any women, if you talk to her that, you know, you will get the loan, go to the bank, the first thing she will say, no, I don't have that much time.

And particularly these women who are so busy, on one side, they are taking care of their businesses. On the other side, they are taking care of their household. In between, if they have to give so much of time, go, come and back, go to the bank and get the loan, then they cannot do it for two, three months.

But generally, that is the turnaround time in the bank for women entrepreneurs to get the loan is more than nearly 30 days. So that she cannot do. So how can we reduce that?

What are the areas where the most time is being taken? So first is that she has a clear cut list. What are the documents which are required?

The second is that what assets she has. Can we tokenise those assets? See, for example, I'm saying that she has a school, her graduation certificate or she has a skilling certificate.

She has gold, she has some other assets like machinery. Can we tokenise those things by blockchain? If we tokenise that, then that is another thing which will add to her credibility to get the loan.

So one is that first to get the access to capital and second is to reduce the time because otherwise she will say, I don't want and she will end up taking the loan from money lender, which is very costly, which will affect the profitability of her business. And if you want to retain these women in the business, because very big thing with women entrepreneurs is that there is a huge dropout. But if they get an access to capital, if they get an access to loan, they can continue their business and they can scale their business.

So there are two main thing I find is that one is that ease of doing business and second is that getting the capital loan in time and amount what they want. Their appetite is also calculated very well through credit rating tool. So what Mann Deshi does is that provide these things to women so that they can easily get the, can be linked to not only Mann Deshi Bank, but other banks also.

In creating these tokenization, that's obviously a physical, digital effort, because, you know, you use the example of a school leaving certificate or a graduation certificate to convert that into a token. It has to happen somewhere. So are you seeing any ways out or have you given any thought to that part of the process?

So actually, we have Diom is the company. They are actually doing, I mean, I'm not, again, I would say like not going to the details, but we would need a software company or the company who will do these processes and have all the data of these women on the blockchain, I would say. And at the same time, we are already talking with the DigiLocker.

So all these documents are KYC, women can always have it on their cell phone through DigiLocker so that whenever she wants to go, because it's not only bank, right, otherwise also if she requires, she has it handy. And with the banks particularly, it will help because then she can share these documents. And I mean, with DigiLocker, she would always have it safe and secured also.

So we are working with DigiLocker at one end and with the software company, Diom, which actually Algorand has introduced us. So they are putting all the data of these women and tokenising all these certificates and KYCs, everything, including sometimes assets like, you know, they have their machineries and bills of gold or the gold bills and all, which they can tokenise and put it on the blockchain so that there is a value added to the business of women or actual valuation can be done by the lender and based on that, they can decide how much credit can be availed to her.

Last and somewhat general question, we are now in the middle of summer for 2025. How are things looking in terms of the rural economy? How are you seeing, let's say, people who are taking loans, repaying them? Are there any stress points or are things looking good, as at least the macroeconomists are saying right now?

Yeah, so I would say like, you know, here it is, I would like to focus on more on the microeconomy and then particularly the rural economy when you are seeing that these women entrepreneurs actually are very much into, they are very committed and persistent about their businesses. And if they get an access to capital, the one first thing which can happen is that their margins and profitability can increase. That is a very, very important part for them.

And if that increases, then they can scale their business. Second is that if these women, they become successful in their enterprise, they build the brand, they become the role model. With Mann Deshi, I'm so proud to share with you that we are, we have, this year we are touching, in 2025, we have touched one million women entrepreneurs.

And we are so proud to share with you that every year we create and nearly a thousand women establish their own brand and they become a brand owner. So with this, I would say that, you know, in this whole, in the sector of micro enterprise, which is, I mean, I'm talking about the general micro enterprise sector also, and in that women owned enterprise, it is actually showing better results than micro credit. And when I say that, why I do say, because there was a time when micro credit was a huge industry and it proved that, you know, women are bankable.

Now the time has come where micro enterprise and access of loan and capital to micro enterprise, women will prove that they will be successful businesswomen and they will be successful repayers and establish their own business. So I would say that, you know, when we talk about women owned enterprise and then we talk about the world index, sometimes you feel ashamed that, you know, number of enterprise owned by women all over the world is so less. But with this, I would say with various innovative solutions, if women get in capital and they are able to own their business and scale their businesses, we will be, this is a starting, 2025 can be the start of increasing the percentage of women owning business globally, nationally and in state like Maharashtra.

Ms Sinha, it was a pleasure speaking with you. Thank you so much for joining me.

Thank you. Thank you, Govind. Nice talking to you.

Author:   The Core Team

In this week's The Core Report: Weekend Edition, Chetna Sinha, founder of Mann Deshi Bank, talks about how women entrepreneurs face credit hurdles due to a lack of collateral and paperwork, but blockchain can simplify access, ensuring faster loans.

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