The Gender Gap in Lending: Challenges Faced by Women Borrowers

A few years ago, I sat across from a friend, an independent graphic designer in Pune, who had just been rejected for a small business loan. She had a steady client base, invoices to show consistent earnings, and some investments under her name. Still, the bank told her she’d need her father to co-sign, despite being financially independent for over six years.

This isn’t an isolated case. For many women across India, borrowing isn’t just about paperwork — it’s about fighting an invisible wall of assumptions.

In this article, I want to explore the roots of this gender gap in credit, share what’s improving, and where we still have work to do. And if you’re wondering where to start, we’ll talk about that too.

India’s Lending Boom: Who’s Being Left Behind?

Credit has become more accessible than ever. From personal loans to digital lending apps, India’s retail credit market has seen massive growth over the past decade. New-age lending options like Buy Now, Pay Later (BNPL), credit cards, and even Loan Against Securities (LAS) are helping people fund everything from education to emergencies. Government schemes such as PM Jan Dhan Yojana and MUDRA have also encouraged formal credit usage, especially for small businesses and entrepreneurs.

But despite all this progress, something hasn’t kept pace: equal access to credit for women. While women make up nearly half of India’s population, their share in formal borrowing is disproportionately low. Even in 2025, the odds are often stacked against women borrowers — not because they lack financial literacy or goals, but because of structural biases that still persist.

The Real Gap: Not Just in Numbers, But in Mindsets

On the surface, the numbers are worrying. According to NABARD and RBI data, women receive less than 20% of all retail loans in India. In rural credit systems, only about 17% of borrowers are women (EPW, 2023). That means the majority of credit in the country is still flowing to men. But beyond the data, what hurts more is the perception problem. Many lenders still see women as financially dependent or consider their income sources unreliable — especially if they’re freelancers, homemakers-turned-entrepreneurs, or part-time professionals.

This leads to women being asked for additional documentation, higher collateral, or even a male guarantor to support their application. Credit products too, for the most part, are designed around a salaried male borrower: stable monthly income, property ownership, years of bank statements. That leaves out a significant portion of women who might be earning regularly, but informally. The result? Even financially savvy women often find it harder to access the credit they deserve. And that needs to change.

What Really Holds Women Back from Borrowing?

Despite all the noise about women-led entrepreneurship and financial empowerment, the ground reality remains stark. Many women still face barriers that have nothing to do with their creditworthiness. One of the biggest hurdles is asset ownership. In most households, property and investments are still registered in the name of the husband or father. This limits a woman’s ability to offer collateral or demonstrate wealth. Even when she’s contributing to the household, her financial participation isn’t formally recognized. Then there’s the issue of thin credit files.

Many women have never had a credit card or formal loan in their own name. So when they do apply, there’s not enough history to establish credibility. Lenders don’t always factor in informal income or Cash-based businesses, even though those are often how women operate — especially in Tier 2 and Tier 3 cities. The system also expects a male figure in the equation. A co-applicant. A guarantor. A sign-off. Even when a woman is financially independent, her paperwork often isn’t considered “strong enough” unless backed by a man.

There was a case mentioned in a recent Rang De feature where a woman running a profitable tiffin service in Delhi was denied a microloan because she didn’t have formal income proof. Her revenues were steady, but mostly in cash. She eventually gave up and borrowed informally at a much higher interest rate. These aren’t outliers. These are everyday stories.

Are Things Getting Better? Slowly, Yes

We are beginning to see green shoots of change. Government schemes like MUDRA and Stand-Up India do aim to promote women-led businesses. Some banks and NBFCs now have exclusive lending products for women.

But the real promise lies in technology-led solutions that go beyond gender stereotypes. Platforms like Quicklend assess your eligibility based on mutual fund holdings, not your gender, marital status, or salaried job. With a Loan Against Mutual Funds (LAMF), you can raise funds without liquidating your investments — and your financial identity remains intact.

We also need to rethink how creditworthiness is assessed. Digital footprints, GST invoices, mobile wallet patterns — these are all viable signals. More women-focused fintechs are beginning to experiment with such alternative credit scoring models. At the same time, financial literacy programs must address the documentation gap and encourage women to maintain financial records in their own name.

So, What Can We Do — As Individuals and Institutions?

If you’re a woman reading this, start by building your financial footprint. Open a credit card, take a small loan, maintain digital income trails. If you have investments, ensure they’re in your name. These little steps go a long way. If you’re part of a lending institution or fintech team, revisit your underwriting logic.

Are you ignoring informal income? Are you factoring in spousal dependency too heavily? Look closer. And if you’re just someone who cares — share this piece. Start a conversation at home. Encourage the women around you to take charge of their finances.

This is general guidance. For personalized loan advice, contact our advisors at Quicklend.