Mapping the Credit Gap for Women Owned SMEs in India

Abstract

Lending to women-owned micro, small, and medium enterprises(MSMEs) is still unexplored when compared to lending toMSMEs in India. Due to a lack of segmental focus and with ahigher perception of risk, formal financial institutions have notmade much effort to understand this segment. The International
Finance Corporation estimates that as many as 70% of womenownedSMEs in the formal sector in developing countries areunserved by financial institutions resulting in a financing gapof around $285 billion. For growth and development of nation itis mandatory to close the credit gap for women-owned SMEs
across the developing world.This paper aims to assess the credit gap in demand and supply offinance to women owned SMEs, to focus on the opportunity in
serving women entrepreneurs, and present initiatives taken byfinancial institutions for improving access in India. The findingsof a paper are based on secondary research and recommendspotential interventions by financial institutions for closing the creditgap in women owned SMEs. It is concluded that improved access
to credit is most impactful when coupled with strong institutionalenvironments; efforts should be made to establish more robustinstitutions and favorable business conditions