By Wilfred Sigler
We do not need Women's Day alone to celebrate womanhood but it can definitely be an occasion when we look at how they have evolved over the years. Gone are the days when we would marvel over their capabilities, now is the time to empower their possibilities. This reflects very strongly in the way they manage their careers, finances as well as credit. Over the last two years, there has been significant growth in the number of women borrowers. They have realized that credit can be an important part of building a secured financial portfolio, enhancing their business or even improving the lifestyle for themselves and their families.
Women are opting for loans to make smart financial decisions and millennial women are getting more and more seasoned at this. As women's contribution to the workforce is increasing, they now are less dependent on men for their life goals. Additionally, women are also willing to share financial responsibilities with their spouses and seeking joint loans for milestone expenses.
Women are keen on home loans
Self-sufficient women no longer want to depend on their families for financing their lifestyle. Across all the loan buckets, women have a larger share of the pie when it comes to home loans. As of December 2019, females occupied 29 per cent of home loans in India. The share of women borrowers for personal loans and auto loans was 15 per cent each, respectively. Although the percentage share is small, it is growing at a phenomenal pace indicating the rising appetite for credit among women.
Compared to men, women's ticket size for loans is also higher. They are more confident with larger sums of loans when it comes to home loans and car loans. A considerable amount of women take loans for setting-up their businesses. This is particularly pointing out to the thriving population of women entrepreneurs who are oriented and self-starters. Looking at the increasing credit consciousness of women and a growing number of women borrowers, lenders are coming up with tailored solutions for the new pool of borrowers.
Female borrowers are less risky
Reports indicate that women are at lower credit risk than men. A quick comparison of their delinquencies shows that they are expert in repaying their loans on tome time and default less. For home loans as well as auto loans, the delinquency of women borrowers is at 0.63 per cent and 0.96 per cent that is better off by 15 basis points and 10 basis points, respectively over the delinquency of male borrowers. They try to repay within due dates to avoid penalty and other miscellaneous charges.
This is a good practice as it plays a key role in keeping a healthy credit score. Given that, all the financial footprints further fill into the arriving at a credit score, any defaults can negatively affect the score. A consistent check at billing cycles and timely payment of EMIs and credit card payments can boost credit scores.
Lately, the awareness around credit scores is increasing and with an added focus on financial inclusion, people are now able to have access to secured loans. Women are making the most of the opportunity and turning to banks, micro-finance companies and NBFCs for loans basis the nature of their loan demand. The loans by female-led MSMEs are also reflecting this trend by a spike in loan applications.
Credit landscape by geography
India being a diverse country and akin to food and festival varieties, different parts of the nation depicts unique credit behaviours. Across India, women in the southern region are more credit savvy as compared to western and northern states. For example, Tamil Nadu, Maharashtra, Karnataka and Telangana contribute 38.6 per cent towards total personal loan sought by women.
The increase in credit availability for women is helping them enrich and safeguard their financial portfolios. They have realized the power of credit and learnt the tricks of the trade by dodging defaults and planning credit well. The lower delinquencies among women are proof of their credit consciousness and financial preparedness.
With a smooth loan screening process and smart technology, women borrowers are given a platform to grow by taking credit with easy loan application and incentives in term of interest rates and repayment options. We are hopeful that the overall credit ecosystem will continue to grow the capabilities to be better placed to provide robust solutions to the emerging group of Indian borrowers.
(The author is Director – Marketing and Sales at CRIF High Mark)