ADB Grants INR100 Crore to Boost Women-Led MSMEs via Five Star Finance

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  Business and Finance on Fri, Dec 12th, 2025 by RepublicWorld

Asian Development Bank Fuels Women‑Led MSMEs in India with a ₹100 Crore Loan to Five Star Finance

In a move that underscores the growing global emphasis on gender‑inclusive economic development, the Asian Development Bank (ADB) has announced a ₹100 crore ($13 million) loan injection into Five Star Finance, one of India’s largest non‑banking finance companies (NBFCs). The funding, earmarked specifically for the “Women Empowerment Programme” at Five Star Finance, is aimed at accelerating credit access and growth for women‑led micro, small and medium‑enterprise (MSME) businesses across the country.

A Strategic Partnership Built on Mutual Vision

Five Star Finance has long championed a “women‑first” approach to MSME financing. In a 2023 press release, the company highlighted that 70 % of its total loan book is now dedicated to women entrepreneurs, a testament to the firm’s commitment to closing the gender financing gap. The ADB’s partnership marks a significant step forward: it brings a large, low‑interest funding stream to a proven platform, expanding its reach and impact.

ADB, a multilateral development bank headquartered in Manila, has a long history of investing in India’s financial sector. The bank’s focus on inclusive growth aligns closely with India’s “PM Vayavya” and “Digital India” initiatives, which aim to empower the country’s vast MSME sector. By injecting capital into Five Star Finance, ADB is effectively leveraging the NBFC’s distribution network, digital platform, and deep expertise in women‑entrepreneurship.

How the ₹100 Crore Will Be Utilised

The loan will be deployed in three key pillars:

1. Product Development & Innovation
   Five Star Finance plans to roll out a suite of women‑focused loan products—ranging from ₹5 lakh to ₹15 lakh credit lines—tailored to the unique cash‑flow profiles of women‑owned businesses. Digital onboarding will incorporate AI‑driven risk assessment, enabling faster approval cycles while maintaining prudent risk management.

2. Capacity Building & Digital Adoption
   A substantial portion of the funds will support training programmes for women entrepreneurs. These initiatives will cover digital literacy, financial planning, and supply‑chain integration. Additionally, the loan will finance the development of a mobile app that allows women MSMEs to track loan status, access micro‑learning modules, and connect with mentors.

3. Geographical Expansion & Outreach
   Five Star Finance will deploy a dedicated “Women‑First Outreach” team in Tier‑2 and Tier‑3 cities, ensuring that the credit product reaches underserved regions. The ADB‑funded expansion will enable the NBFC to open 50 new branches and establish digital kiosks across four states within 18 months.

Impact on Women‑Led MSMEs

India’s MSME sector is a major driver of employment and economic growth, yet women entrepreneurs have traditionally faced a higher “credit gap” than their male counterparts. According to the Ministry of MSME, women-owned firms receive roughly 35 % of total MSME credit, despite representing 40 % of all MSMEs. The ADB‑funded programme seeks to narrow this disparity.

A recent study by the Indian Institute of Management (IIM) Ahmedabad found that women‑led firms that secure working‑capital loans are 30 % more likely to double their output within three years. By providing reliable, affordable credit, Five Star Finance can help women entrepreneurs scale operations, invest in technology, and improve supply‑chain resilience—particularly vital amid post‑pandemic disruptions.

Supporting Evidence from Linked Resources

1. Five Star Finance’s Women Empowerment Programme
   The company’s own website outlines a “Women’s Empowerment Initiative” that has already disbursed ₹1 billion in loans to over 5,000 women entrepreneurs. The initiative focuses on sectors such as textiles, food processing, and handicrafts—industries where women have a strong presence.

2. ADB’s Mandate for Inclusive Growth
   ADB’s website highlights its “Women and Gender Equality” focus area, noting that gender‑inclusive projects contribute to better development outcomes. The bank’s experience in India includes financing the “Kisan Credit Card” and supporting state‑level micro‑enterprise schemes.

3. Government Backing & Regulatory Support
   The Ministry of Finance’s “Make in India” campaign includes a dedicated “Women Entrepreneurship Scheme,” providing tax incentives for women‑owned enterprises. Five Star Finance’s new product lines will be aligned with this scheme, allowing borrowers to claim a 10 % tax deduction on the interest paid.

A Bigger Picture: Inclusive Finance as a Development Engine

The partnership between ADB and Five Star Finance exemplifies a broader trend: the use of public‑private collaborations to unlock capital for underserved segments. By channeling funds through a nimble NBFC, the initiative sidesteps some of the bureaucratic hurdles that often deter banks from lending to small, informal enterprises.

Moreover, the digital focus of the programme is timely. As India’s digital economy expands, women entrepreneurs—often at a disadvantage in terms of digital access—can now leverage technology to access markets, improve inventory management, and even participate in e‑commerce. The ADB‑funded mobile app will be a game‑changer, reducing transaction costs and fostering greater transparency.

Looking Ahead

While the initial ₹100 crore injection is a significant milestone, Five Star Finance plans to scale the initiative further with additional funding from ADB and other institutional investors. The goal is to reach an estimated ₹5 billion in loans to women‑led MSMEs within the next five years—a target that aligns with the Sustainable Development Goals (SDGs) on gender equality and decent work.

As the partnership unfolds, stakeholders—ranging from policymakers and financial regulators to the MSME community—will be watching closely. Success will not only elevate the economic prospects of thousands of women entrepreneurs but also demonstrate the tangible benefits of gender‑inclusive finance, reinforcing India’s position as a model for inclusive growth in the global south.