Whalesbook
The 'Missing Middle' in Working Capital Access
The NITI Aayog report revealing that merely 4.3 percent of women-owned enterprises secure essential cash credit or overdraft facilities highlights a significant "missing middle" in India's credit system. This statistic points to persistent barriers preventing many women-led businesses from accessing the crucial working capital needed for expansion and sustained growth, despite increased overall access to smaller loans.
Lender Concerns and Structural Hurdles
Lenders often favor highly predictable business profiles, according to Santosh Agarwal, CEO at Paisabazaar. Self-employed borrowers, a category many women entrepreneurs fall into, often show inconsistent cash flows, seasonal income, informal credit histories, and scattered banking records. Adhil Shetty, CEO at BankBazaar.com, noted that cash credit and overdrafts are underwritten based on continuous business performance, demanding audited financials, GST trails, and collateral.
Specific Challenges for Women-Led Businesses
For many women-led businesses, especially smaller or home-based operations, meeting these stringent requirements is challenging. Banks typically rely on collateral and GST turnover as proxies for creditworthiness. However, as Manasa Rajan, co-founder of Jupiter Meta Labs, points out, women entrepreneurs often lease assets, reinvest informally, or run businesses from home, structures that disadvantage them in traditional collateral-based lending.
Loveena Kansal, EVP & business head at Mega Corporation Limited, framed the issue as a lack of access to the right credit structures, rather than credit itself.
Digital Lending: Promise vs. Reality
While digital lending models are introducing alternative underwriting techniques, assessing creditworthiness through e-signatures, e-KYC, and digital payment ecosystems, experts caution they are not a complete solution for larger credit needs. Adhil Shetty mentioned a shift toward cash-flow-based underwriting using bank statements and GST filings, which could improve access. However, Manasa Rajan and Neha Juneja, co-founder of IndiaP2P, highlighted that these digital trails are not yet systematically integrated into mainstream underwriting at scale for larger ticket sizes.
Pathways to Better Financial Access
Improving access requires structural reform. Experts suggest expanding credit guarantees specifically for working-capital products and formally recognizing cash-flow-based underwriting as critical steps. Loveena Kansal advocates for fit-for-purpose credit design tailored to women entrepreneurs' realities, asserting that their creditworthiness is often strong but not matched by suitable financial products. Enhanced transparency and public reporting of data could foster greater accountability in the lending ecosystem.