While peer-to-peer (P2P) lending is hailed as a route to create financial inclusion, it still has little impact on bridging the gender gap. Female borrowers are generally seen as more creditworthy than their male counterparts, because women have a better track record in spending and repaying their loans. However, a study on PPdai.com, a P2P lending platform in China, shows that gender discrimination exists in a different form: female borrowers are more likely to be funded than male borrowers but they have to pay higher interest rates. Consequently, since women are considered to have less sophisticated knowledge on investment products, they may miss out on investment and business opportunities. Nonetheless, some P2P platforms try to minimise these risks by offering loans for women only.
Amartha is a pioneer of online P2P lending in Indonesia. Founded in 2010, the institution was established as a conventional cooperative to help the unbanked community. The cooperative lends money to women entrepreneurs in rural areas and enjoys gain through profit sharing. In 2015, Amartha transformed into a financial technology startup, integrating credit scoring technology for a quicker loan application process and better risk calculation for investors. This allows Amartha to grow the amount of loans disbursed by more than eight times within two years. To date, Amartha has disbursed Rp445 billion (US$31.5 million) to more than 110,000 women entrepreneurs. Investors can get up to a 15% yield, with a 99.68% on time repayment rate.
Mekar is another Indonesian lending platform that invests in women-run small and medium enterprises. Founded in 2016, Mekar has disbursed around US$7 million in micro loans that comes from both individual and institutional investors, including Indonesian banks such as Bank Woori Saudara and Bank Sampoerna. It offers solid returns of between 10 and 12.5% annually. Fully supported by the Putera Sampoerna Foundation, Mekar allows institutional investors to incorporate the investment in the company’s Corporate Social Responsibility program for positive branding. Going forward, Mekar will explore opportunities to export its business model to other Asian countries, for example the Philippines.
Cash Suvidha is a Delhi-based microlending platform for four different categories: entrepreneur, Small & Medium Enterprise (SME), personal, and women’s loans. Compared to its other loan products, Cash Suvidha for Women offers lower interest rates and less supporting documentation to help unbanked women in India to sustain their businesses. The platform has its own “Suvidha Score” system to determine applicants’ creditworthiness for instant loan approval and disbursement. Founded in 2016, the platform has disbursed around US$16 million to more than 27,000 borrowers to date.
Image credit: The Telegraph.