The study aimed to understand the nature of difference in access to credit by entrepreneurs, especially women entrepreneurs in terms of barriers and propose solutions
Background
Women-run micro, small and medium enterprises (WMSMEs) account for approximately only 20 percent of all MSMEs in India. WMSMEs are constrained by a variety of various challenges, principally access to finance at different stages of the business. A large body of evidence has documented the gender gap in access to finance between men and women-run enterprises.
In this context, a study was conducted by Villgro Innovations Foundation and LEAD at Krea University. The study built on the existing literature to analyse if the gender credit gap could be attributed to explicit or implicit gender biases and discriminations present in identification/sourcing strategy, and/or credit underwriting and decision-making processes adopted by financial institutions. The study was supported by the Aspen Network of Development Entrepreneurs (ANDE) Gender Equality Action Labs, with funding from the U.S. Agency for International Development (USAID).
Objective: The study sought to achieve the following objectives:
Conducting demand-side analysis
Understand the nature of difference in access to credit by entrepreneurs, especially women entrepreneurs in terms of barriers
Integrating supply-side perspective
Understand characteristics of credit products/services offered by financial institutions to women, entrepreneurs, there is sourcing strategies, underwriting, etc
Recommendation for financial institutions
Propose solutions within the extent, underwriting process, process, by designing appropriate credit products/services that address the demand side, barriers of women, entrepreneurs
Approach
The study focussed principally on the WMSMEs that had a reported capital requirement greater than or equal to INR 10 lakhs in the financial year 2023-24 (FY24), and had a certain capital requirement in the last five financial years, 2018-19 to 2022-23 (FY19-23). (In addition, the study also provided a contrast with the enterprises with capital requirements of less than INR 10 lakh in FY24.) The total sample size of the study was 856 entrepreneurs (383 women and 473 men).