ADB lends $100m to expand MSME finance for lower-income women in India

ADB Country Director for India Mio Oka said women entrepreneurs continue to face structural barriers that limit their ability to start, sustain and scale businesses.

The Asian Development Bank (ADB) has signed a $100 million loan agreement with Five-Star Business Finance Limited (FBFL) to significantly expand access to business loans for women entrepreneurs from lower-income groups across India.

The financing supports the Five-Star Social Loan: Improving Access to Micro, Small, and Medium-Sized Enterprises Finance for Lower-Income Women Borrowers Project, which aims to grow FBFL’s MSME loan portfolio targeted specifically at women-led businesses. The project is designed to address long-standing gaps in access to formal finance for women entrepreneurs, particularly in underserved and semi-urban regions.

ADB Country Director for India Mio Oka said women entrepreneurs continue to face structural barriers that limit their ability to start, sustain and scale businesses.

“Women entrepreneurs in India, especially those from lower-income segments, face systemic challenges such as lack of collateral, reliance on informal income sources, and limited financial literacy,” she said. “This project directly addresses these constraints and strengthens financial inclusion by providing access to appropriate, affordable credit.”

The loan will be deployed under a social finance framework aligned with international standards. The framework will be independently verified with the support of ADB’s technical assistance, ensuring transparency, accountability and measurable social impact. In addition to expanding lending, the project will help FBFL embed gender-responsive practices across its operations.

These measures include tailored customer engagement strategies for women borrowers, digital financial literacy programmes to improve borrowers’ financial management skills, and inclusive workplace training to strengthen gender equality within the institution itself.

FBFL Chair and Managing Director Lakshmipathy Deenadayalan said the partnership with ADB recognises the company’s long-standing focus on financial inclusion.

“The funding support from ADB is an endorsement of our two decades of work in empowering small businesses and self-employed individuals by helping them transition from informal to formal finance,” he said. “We are confident this support will help us improve livelihoods and create sustainable economic opportunities for financially excluded women.”

Five-Star Business Finance Limited specialises in lending to MSMEs in tier 3 cities and rural and semi-urban areas, where access to formal banking remains limited. The company has a strong track record of serving underserved segments, including women borrowers and first-time users of formal credit.

FBFL currently operates through a network of more than 700 branches across India and serves over 400,000 borrowers nationwide. By expanding credit to women-led MSMEs, the project is expected to support income generation, job creation and local economic growth, while contributing to broader development goals around gender equality and inclusive growth.

The initiative aligns with ADB’s broader strategy to promote women’s economic empowerment, expand access to finance for MSMEs, and support inclusive and sustainable development across India.