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Business News/ Opinion / Columns/  How India could speed up the financial inclusion of women

How India could speed up the financial inclusion of women

Relevant data analysis and an outreach by women business correspondents can close our gender gap

Photo: MintPremium
Photo: Mint

Over the past year, the covid-19 pandemic has thrown existing inequalities into sharp focus. While the nation’s attention has been drawn to the plight of migrant workers and farmers, the worsening gender gap has not received similar attention. Analysis of the Centre for Monitoring Indian Economy’s Consumer Pyramids Household Survey data by researchers at Azim Premji University showed that women were seven times more likely to lose their jobs during last year’s lockdown, and 11 times more likely to not return to work. An ongoing survey ( on micro, small and medium enterprises by Global Alliance for Mass Entrepreneurship and LEAD at Krea University shows that women-owned small businesses were hit more badly by the pandemic; 43% of women-owned enterprises surveyed reported monthly profit less than 10,000, compared to just 16% of units owned by men.

India’s government was quick to announce and transfer 500 per month for three months of lockdown last year to women through their Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts. This seamless transfer of money was made possible by the Centre’s direct benefit transfer-PMJDY linkage, but more importantly, this could happen because the government knew which accounts were held by women. Unfortunately, the lack of gender-disaggregated data in the banking sector overall meant that only PMJDY account holders received the benefit, and many other deserving women were left out. According to estimates by the Yale Economic Growth Center, more than half of India’s women poor missed the cash transfers.

Even though 55% of PMJDY accounts are owned by women, making for 232.1 million accounts, the problem goes two ways—not all poor women have PMJDY accounts and not all PMJDY accounts belong to the poor. The Financial Inclusion Insight survey from 2017 used by the Yale study showed that while 78% of poor women respondents reported having a bank account, just 23% reported owning a PMJDY account.

In the absence of official numbers, we depend on surveys to get a sense of the trends and extent of the challenge. Global Findex 2017 showed an immense improvement on inclusion with the PMJDY. The percentage of women in India who reported owning a bank account, or an account at any other financial institution, rose from 26% in 2011 to 43% in 2014, and to 77% in 2017. The gender gap in terms of account ownership effectively reduced from 20 percentage points in 2014 to just 6 percentage points in 2017. But the gender gap in the usage of these accounts stayed high at 11 percentage points.

While economic data is usually spliced by states, geographies (urban-rural) or sectors, the gender angle stays out of the common discourse. So though we all know that women employees and entrepreneurs traditionally face more challenges than men, the extent of disparity remains in the shadows. The case for gender-disaggregated data in banking and financial sectors is a first step towards closing the gender-gap in India.

As a member of the Alliance for Financial Inclusion, India had pledged to close the gender gap in financial inclusion by implementing the Denarau Action Plan adopted in Fiji at the April 2016 Global Policy Forum. To redeem that pledge, we must first generate gender-wise data. The country’s regional and social heterogeneity makes it crucial that this data be granular. The Reserve Bank of India (RBI) and Department of Financial Services (DFS) need to get this implemented.

Second, apart from gender-specific data, there is another important initiative that the DFS and RBI should commit themselves to. That is the appointment of more women as business correspondents (BCs) by banks. The pay-offs will be manifold for economic and social progress in the country. One of the greatest challenges in increasing access to and usage of financial services by women is the time and cost expended on reaching a bank outlet. Although it is gratifying that a forthcoming working paper, The Fintech Gender Gap from the Bank for International Settlements, finds that Indian women are as likely to use fintech as Indian men, there are bound to be wide regional and rural- versus-urban disparities in this finding. That is another case for granular data. In states like Uttar Pradesh, Bihar, Rajasthan, etc., where the mobility of women is severely restricted, the situation is likely more serious. Women, in rural areas especially, are reluctant to visit bank branches, where they are often dealt with summarily by male staff.

Understandably then, they are more comfortable if bank agents meet them at their own homes. If these agents are women, the trust factor is magnified. However, women agents form less than 10% of the total agent network. So far, the focus has been on using women in self help groups (SHGs) as ‘bank sakhis’. This initiative has worked well where SHGs are already in place. However, measures to recruit and train women BCs would help widen the spread of banking, enable the financial independence of women, help them plan their family finances, and facilitate women entrepreneurship, both directly, through credit, and indirectly, with BCs acting as role models.

These are the authors’ personal views.

V. Anantha Nageswaran & Sumita Kale are, respectively, member of the Economic Advisory Council to the Prime Minister and advisor, Indicus Centre for Financial Inclusion

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Published: 08 Mar 2021, 09:52 PM IST
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