Women have a harder time raising funds for their business than men, according to a report by the International Finance Corporation (IFC), a World Bank arm.

The gap in financing women-owned enterprises has been pegged at a whopping ₹6.37-lakh crore — 73 per cent of the total demand.

Significantly, the report noted that there is empirical evidence that women tend to be better borrowers and customers, thus providing “value” (in terms of better credit quality, comprehensive banking relationships, and enhanced profitability) to their partner financial institutions.

Unmet demand

According to IFC, the total funding requirement of women-owned enterprises in India, using 2012 data as a base, is around ₹8.68-lakh crore, which includes both debt and equity.

The total formal finance extended to women-owned enterprises in 2012 was ₹2.31-lakh crore, said the report, ‘Improving access to finance for women owned businesses in India’.

More than 90 per cent of women-owned enterprises in India are self-financed and represent about 10 per cent of all MSMEs (micro, small and medium enterprises) in the country. Collectively, they contribute 3.09 per cent of industrial output and employ over eight million people.

While 78 per cent belong to the services sector, almost 98 per cent of them are micro-enterprises.

The report said that although funding needs of women-owned enterprises are not radically different from those of male-owned businesses, financial exclusion is at a higher level due to a combination of factors.

The constraints women entrepreneurs face include limited awareness and understanding of financial products/services; lack of collateral; and lack of confidence to approach financial institutions.

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