Despite a spectacular performance, India’s financial inclusion story suffers from gender inequity. Significant change can come only through focussed efforts from Governments and banks
It is now a universally-acknowledged fact that India has shown spectacular performance in financial inclusion and is now a guiding light for the developing world. Several international surveys and studies have vouched for this. They also highlight the impressive gains made by women. Drumbeaters are excited about India climbing the ladder of financial inclusion. According to the World Bank’s Global Findex Survey (2017), 80 per cent of adults in India now have a bank account — 27 points higher than the 53 per cent estimated in the Findex 2014 count, which showed a 17-point addition to the 2011 measure (35 per cent). Findex 2017 estimates that 77 per cent of Indian women now own a bank account against 43 per cent and 26 per cent in 2014 and 2011. On this basic measure of financial inclusion, females are more empowered than before. The male-female difference, or the gender gap, in account ownership narrowed to 6.4 percentage points in 2017; it was 19.8 in 2014.
However, a deeper view will reveal that this granular and rosy picture is tinted. While more women have been enrolled for bank accounts, a larger gender gap persists in account usage. And beyond account ownership, in terms of credit and insurance usage, gender gap remains high. For example, female account owners showed 11 per cent point gap against men in terms of account usage; 54 per cent of women with an account made no deposit or withdrawal in a year as compared to 43 per cent of men. The credit gender gap is more stark. Distribution of outstanding credit in small borrower accounts showed 24.5 per cent share of female account owners against 72 per cent of men as on March 2017.
Financial inclusion of women is one of the many powerful levers that can advance gender equality. Efforts to get more women signed up for accounts has seen good results in recent years as development agencies and Governments alike have stated focusing on financial products as a tool for poverty alleviation and female empowerment. Despite increased attention to financial inclusion for women, we have not been able to translate these efforts into large-scale, meaningful progress. Significant change can come only through focussed efforts from Governments and banks. It is here that increasing awareness can play a big role to bridge the gap.
Women have the power to make, spend, save and control their money — they make gains not only for themselves but also for their communities. It is now a recognised fact that “women’s market” represents numerous segments of clients — from low-income salaried workers (factory and domestic) and low-income self-employed women in the informal sector to women who work in agricultural value chains to small and medium enterprises.
Gender characteristics shape cultural beliefs, which, in turn, impact women’s attitudes about money and finances. The top barriers that constrain women’s effective financial inclusion are: Not having enough money to invest; unexpected expenses; not knowing whom to trust; inability to maintain balance between spending and saving so as to achieve a healthy balance between short-term needs and long-term goals; being overwhelmed by choices when it comes to financial options; and not understanding financial jargon. More broadly, these barriers break down into three categories: Insufficient knowledge, insecurity and lack of control. Moreover, woman customers continue to be served by generic products that are only superficially tailored to their needs.
Women face several barriers towards their path to financial inclusion: Limited access to mobile phones, low literacy levels, less confidence in using technology and restrictions on travel or social interaction. We need to address these through behavioural and reformist approaches instead of the usual hardware-based approach so that demand and supply side barriers faced by them in accessing finance are eliminated. A simple all-embracing broadest possible definition of financial inclusion for women would include not just access to services and credit but meaningful use of valuable and innovative financial products to build security and prosperity.
Women’s participation in the financial system can have significant benefits in terms of economic growth, greater equality and societal well-being. When women are empowered as economic actors, benefits touch everyone. Women have more child-centered preferences than men. Access and usage of financial services are levers for increasing their participation in the economy. This enhances their self-confidence and gives them the power to make financial decisions, thus resulting in large development payoffs.
In short, financial inclusion enables women to smooth consumption, ensure security, increase saving and investment rates, lower financial risks and facilitate new livelihood and income opportunities for the family. It enhances financial resilience for low-income women. Further, there are several barriers that constrain the full inclusion of women in formal finance. Product-driven financial literacy is necessary to ensure that poor women are not short-changed. While financial products have their benefits, there is a clear danger of mis-selling that can damage marginalised segments, who have an uncertain cash flow. The philosophy shared by the financial inclusion community is that engagement creates knowledge, which creates confidence. The goal must be to ensure that women become confident financial stewards, make wise decisions for themselves, their families and the world. Women are more discerning customers, asking for more information before buying products and services than men.
Financial products are often not designed, distributed or bundled to meet the needs of women. They are usually tasked with stretching the family budget in times of financial hardship. Providing micro credits or a small affordable and account-linked overdraft can help women cover their day-to-day household emergencies. Women’s financial needs and responsibilities require bundled solutions of savings, credit and insurance.
Professionals and practitioners have put forth some silent features of financial products and services that foster women’s active participation in formal finance. They found that women do not have a smooth financial journey and have more interruptions and life-stages in their financial lives (withdrawal from employment during pregnancy and in medical emergencies for nursing sick family members). They may remain active users of the accounts during these periods. Women should be able to reactivate their accounts without much hassles or penalties. Women are also more price-point sensitive and expect affordable fees.
Women clients, particularly in rural areas, find interacting with male staff at banks an intimidating experience and may not trust them. Banks are not considered part of their trusted service providers. To overcome such psychological barriers, financial institutions can increase women staff and appoint dedicated people to serve women customers because most of them have a preference for a non-inhibiting environment.
Women customers are likelier to entrust such a retailer with their finances. Women look for a consistently high-quality experience and the qualities they look include: Trustworthiness, understanding, dependability and accessibility. In failing to develop client experiences rooted in men and women’s fundamentally different perspectives on finance, financial services institutions are missing a significant business opportunity. Employing more women as bank tellers or mobile money agents can make it easier for women to board financial services. Women want financial services to be delivered to them by someone who experiences similar issues as them. The country has only five per cent women as business correspondents. India has 8.7 million SHGs comprising more than 100 million women members. The number of SHGs in the business correspondent space needs to be stepped up.
To make financial inclusion for women more relevant and meaningful, we also need to educate men about the peculiarities and needs of the female lot. Inadequacies of focussing on women in isolation have long been recognised: Women live in communities, they live in families and with men. Abstracting women from their social realities distorts our understanding of the relational nature of gendered power and the interdependency of women and men. This has a strong bearing on women’s motivations, choices and possibilities.
(The writer is Member, NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women)
