ADB Extends $100 Million Loan to Five-Star Business Finance to Boost Women-Led MSMEs in India

The Asian Development Bank (ADB) has signed a USD 100 million loan agreement with Five-Star Business Finance Limited (FBFL) to significantly expand access to business credit for women-owned micro, small and medium enterprises in India, particularly those from lower-income and underserved segments.

The financing is aimed at strengthening FBFL’s MSME loan portfolio for women borrowers, with a specific focus on tier-3 cities and semi-urban and rural markets where formal credit penetration remains limited. According to ADB, the loan will be deployed under a social finance framework aligned with international standards and will undergo external verification supported by ADB’s technical assistance program.

Beyond capital deployment, the initiative places strong emphasis on institutional capability building. The program will support FBFL in embedding gender-responsive practices across its operations, including customised customer engagement models, digital financial literacy initiatives for women entrepreneurs and inclusive workplace training for staff. These measures are intended to address structural barriers that continue to restrict women’s access to formal finance.

“Women entrepreneurs in India, particularly from lower-income segments, face systemic challenges such as lack of collateral, dependence on informal income sources and limited exposure to financial literacy,” said Mio Oka, ADB’s Country Director for India. “This project seeks to address these constraints by strengthening inclusive lending practices at the last mile.”

India’s MSME sector employs over 110 million people and contributes nearly 30 percent to GDP, yet women-owned enterprises account for a disproportionately small share of formal credit. According to global development benchmarks, women-led MSMEs in emerging markets face a financing gap estimated at over USD 1.5 trillion, with South Asia among the most affected regions. Compared to Southeast Asian economies where digital credit models have improved women’s access to finance, India continues to grapple with documentation gaps, collateral requirements and uneven digital adoption.

FBFL’s operating model positions it as a critical conduit for targeted inclusion. The company currently serves more than 400,000 borrowers through a network of over 700 branches across India, with a longstanding focus on underserved communities. Its emphasis on smaller ticket loans and proximity-based engagement differentiates it from larger commercial lenders, making it well-suited to channel development finance into high-impact segments.

For ADB, the partnership aligns with its broader regional strategy to promote inclusive growth, gender equity and sustainable finance. Similar gender-focused credit programs supported by multilateral institutions in countries such as Indonesia and Vietnam have demonstrated that targeted MSME financing can improve household incomes, business resilience and local employment outcomes.

As global development lenders increasingly prioritise measurable social outcomes alongside financial returns, the ADB–FBFL initiative reflects a growing shift toward impact-linked lending models. If executed effectively, the program could serve as a replicable framework for scaling women-centric MSME finance not only across India, but across emerging economies facing similar structural constraints.