Why banks rely more on women while lending loans — report explains
2 min read 07 Mar 2023, 12:42 PM ISTWith rising credit discipline, a total of 51 per cent of women have better credit score, falling in prime category, than 51 per cent of men in last five years, says report
PremiumAs more and more women are coming forward to borrow money for their personal expenses or starting a new business, there has been a rise in female lenders in India. One of the reasons behind rising share is the increasing number of women with lower risk profile compared to men, according to TransUnion Cibil data.
The latest data released by TransUnion Cibil shows that around 57% of women borrowers fall into the prime score range in CY 2022. Whereas for male borrowers, the percentage is limited to 51% in the same year. Prime is one of the categories for lenders who have a credit score of 660-719. Credit score is assigned in the range of 300-900.
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The lower risk profile of women can be connected with the self-aware nature of women reflected in the rising number of self-monitoring women consumers reaching 15% in CY 2022, from 13% in CY 2021. The report also talked about the rising practice of accessing CIBIL score and report among women. In 2022, more than 8.2 million women accessed their CIBIL score and report, compared to 5.7 million in CY 2021, said the report.
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The report found that there was a jump of 83% i the number of self-monitoring women borrowers, which was merely 60% in male consumers. The report also highlighted that 28% of the self-monitoring women borrowers improved their credit profile by 20+ points.
“The increase in number of women monitoring their CIBIL Score and report reflects improved financial awareness and credit consciousness. It also demonstrates that women are cognizant that credit discipline matters, and are taking proactive measures to continually improve their credit profile, “says Ms. Sujata Ahlawat, Senior Vice President and Head – DTC Interactive, TransUnion CIBIL.
Women seeking business loans tripled in last five years
According to the report, the number of women seeking business loans tripled in last five years between 2017 and 2022. The rising number of loans is a reflection of the growth of women-led start-ups in India. Increasing number of women who are aspiring to open their own start-up shows their rising participation in building India's start-up ecosystem. The report also cited that the share of women in business loan portfolio has grown by 12 percentage points from 20% in 2017 to 32% in 2022. Moreover, there was a rise in number of women in home loan segment as well. Their participation grew by 6 % in the last five years in home loan segment. Talking about category, women are more interested in taking personal loans, consumer durable loans and gold loans.
Rising number of women borrowers in semi-urban and rural locations
There has been improvement in the demographic dividend of women borrowers in the country. The five years data of the TransUnion CIBIL report indicates an overall expansion of women borrowers in rural areas by 62% in last five years. According to the report, rise in the number of women borrowers in semi-urban and rural locations at a Compounded Annual Growth Rate(CAGR) of 18% in last five years. Whereas the rate was 14% in metro and urban areas. Women from West Bengal, Bihar and Rajasthan were far ahead of women of other states in lending.
