The money gap

A man and woman walk into a bank. The man walks out with a business loan, the woman walks out with trauma. This is not a joke because the lack of credit access for women entrepreneurs is not a laughing matter. In spite of several programmes, government initiatives, and bank schemes, women entrepreneurs continue to face a deeply skewed reality. I can tell from personal experience that none of the obstacles that we hear about are hyperboles. These are real situations where dynamic, deserving women have been denied funds. Obviously, some of these superhumans have found ways to fight the bias and move the needle in their favour. But they have strived and struggled to do so; several others have thrown in the towel or have been swallowed by market and global uncertainties. The truth is that it should not have to be so damn difficult.

Typically, when a woman entrepreneur approaches a bank for working capital or even an overdraft facility, she will be first asked for her husband’s name (or any other male partner), a sole proprietorship will be viewed with suspicion followed by demands for a guarantor (who must almost always be male) will be put forth. As outlined in a recent LinkedIn live session that I conducted with an MSME (micro, small, and medium enterprises) expert, women entrepreneurs are also more likely to be asked for collateral than men. And given that women rarely have properties in their name, their search for capital ends right there.

This is in spite of the fact that a whopping 94 per cent of women repay loans on time. Our repayment rates may be high, but the gender bias is still rocketing. Women-led MSMEs comprise 20 per cent of all MSMEs in India. Even as we claim to encourage more female participation, women businesses encounter prejudice at every step of the way. As per Small Industries Development Bank of India (SIDBI), women experience a 35 per cent credit gap as compared to 20 per cent faced by men.

It’s well-documented that women MSMEs have to jump through hoops for the same benefits that are doled out to their male counterparts. Reports suggest that 79 per cent of women-led businesses are self-funded, primarily because enterprising women have little other choice. Even where support schemes exist, the sectors covered are not expansive. News reports suggest that under the decade-old Pradhan Mantri Mudra Yojana (PMMY) in 2024, women held 42,492,281 loan accounts out of a total of 66,777,013, highlighting their desire for financial assistance. However, of the Rs 5,41,012.86 crore earmarked for that year’s target, only Rs 2,25,887.08 crore was extended to women entrepreneurs.

According to the International Finance Corporation (IFC), a man gets a loan sanctioned within an average of two bank visits, for a woman, it takes double the number of visits. When I tried to expand my business, my first port of call was my banker of 10 years. In spite of my strong relationship with the bank, I was asked for a husband/male partner/guarantor. Unlike most women, I had collateral to offer, and yet they asked me for “comfort”, coercing me into taking a hefty insurance in spite of my multiple current insurance policies. I felt so betrayed and frustrated that I decided to sever ties with the bank. The new bank, though less biased, had inscrutably high levels of scrutiny. If only they put wilful defaulters through the same telescopic lens!

Women-led MSMEs are not the only ones receiving a raw deal; female-led startups are faring no better. A recently released report by Kalaari Capital highlights that for every Rs 100 raised by male founders, women founders get a mere Rs 4! There are more women enrolling for STEM (science, technology, engineering, and mathematics) education but just not enough women at the top of the corporate chain, not many writing cheques, and in spite of an influential Indian startup ecosystem, the ground scene still pinches. So, we may wish each other “happy women’s day” and pat ourselves on what we have achieved, but the journey ahead remains bumpy, tremulous, and starkly unfair.

Views expressed are personal. The writer is an author and media entrepreneur