INTERVIEW: After six months of lending, Sheroes founder explains how tough it is

• Eight-year old Sheroes started lending, only to women, via its digital bank called Mahila Money six months ago.
• Chahal wants to scale this venture to 10 million more women by 2022.
• Chahal recounts the challenges and how she plans to overcome them in an exclusive interview with Business Insider.
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Delhi-based women-only social network Sheroes is now expecting to go big in the lending space by providing small business loans to female micro-entrepreneurs in India.

The eight-year-old company set up a new neobank, named Mahila Money, six months ago to offer loans as well as financial services to women. It is a separate entity, with a separate team, to scale it faster with sharp focus.

The company currently offers small loans at an average ticket size of ₹50,000 and it goes up to ₹500,000 to yoga coaches, tuition teachers, social commerce sellers, beauty parlour owners, and boutiques owners.

Simply put, Neobanks are digital only banks, without any physical branches. You can read more about it here.

While founder Sairee Chahal started out with some ambitious goals, Mahila Money has managed to lend to 200 women in the last quarter. She noted that the people borrowing on Sheroes' Mahila Money have never borrowed capital from the formal market before and that is majorly due to lack of options available for female entrepreneurs.

One of the biggest hurdles in the segment has been the lack of trust.

“Trust is a major, major thing. No woman, no one wants somebody landing up on their doorstep or somebody calling their family or relatives to get loan recovery” Chahal said in an interview.
The whole space for small loans has been stained by the unregulated players, many of whom act unethically to recover their loans. An issue that even the Reserve Bank of India (RBI) has been worried about.

Even those who need loans have been scarred and many a time wary of even the legitimate players like Sheroes.

But trust can get you a foot in the door. There are many other challenges along the way.

The traditional lending system leaves out a major chunk of the Indian population who do not have a credit score. Women were at the deep end of this pool since they neither had any asset or credit score to borrow capital on.

Women have to rely on other male members of the family to finish up the loan process since they don’t own any assets under their name and it is quite discouraging for them, Chalal explained.

To beat this challenge, and to identify women who can likely repay loans, Mahila Money looks at 100 new data points including their understanding of the business, behavioral data, social data, transaction data, and social capital among others, Chahal added.

It is still a tough task. So, Chahal has partnered with organisations that work closely with these women.

In order to build that trust Mahila Money has partnered with 60 women-focused organizations — Empower Foundation, Udyam Foundation, Seva Foundation, beauty parlour associations —, which have close to 1 million members. These organizations redirect their members to Mahila Money at the time of need and help in the underwriting process as well.

The company aims to connect with 3000-4000 such organisations, with close to 10 million members, by the end of 2021. This is in addition to the 22 million women that are registered on the Sheroes app for employment, entrepreneurship or simply to engage in a community.

This is still a huge opportunity. According to a report by International Finance Corporation, a member of the World Bank, India ranks third-highest in entrepreneurship gender gap across the world and the lack of capital is a major reason behind it.

Another report published by Mckinsey Global Institute in 2018 added that India can increase its gross domestic product (GDP) upto 60% by 2025 through equal participation of women in the labor force. This would need an additional $700 million to $7.9 trillion.

Chahal wants to scale this venture to 10 million more women by 2022, from the current customer base of 200.

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