The missing middle: Bridging the gap of financing needs for women owned smes in India

Globally, a woman in entrepreneurial activity share is lesser as compared to men, with little progression over time. The gap in early stage entrepreneurial activity rate between men and women is highest in India in comparison to other BRICS nations (GEM, 2014). The Gender GEDI Index has ranked India's second to last, behind Egypt and Morocco out of 17 countries. Women owned businesses in India are undercapitalized with a financing gap of Rs. 6.37 trillion with 73% of the total finance demand among women owned business in India remains unmet. (IFC report, 2013).The gender gap in entrepreneurial activity and capitalization can be because of different economic, financial and socio-cultural factors effecting the business environment for entrepreneurs. Lending to women-owned micro, small, and medium enterprises (MSMEs) is still not explored as compared to lending to MSMEs in India. Due to absence of segmental focus and with greater perception of risk, formal financial institutions have not contributed much to understand this segment. For growth and development of nation it is mandatory to bridge the credit gap for women-owned SMEs across the developing world. This paper aims at understanding how accessibility to finance for women owned MSMEs differs from men-owned MSMEs by mapping women-owned MSMEs worldwide along with their capacity in accessing finance, to present the best practices for promoting growth of women-owned MSMEs by providing access to finance, and for building fact base in enabling policy discussions. The findings of a paper are based on secondary research and recommends potential interventions by financial institutions for closing the credit gap in women owned SMEs. It is concluded that improved access to credit is most effective when tied with strong institutional environments; efforts should be made to establish more vigorous institutions and favorable business conditions.