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Imagine it is the end of the month and your house help is due to be paid. If you look beyond the mundane nature of such a transaction, you will quickly notice a gender divide in financial choices and behaviours. To give you a sense of how problematic this gap is, let me share a recent anecdote.

Before the pandemic struck, I used to pay my house help, Asha, in cash. She has a savings account at a nationalized bank and occasionally receives cash transfers from the government in that account. In the past year, lockdowns restricted our ATM visits, so I asked Asha if we could transfer her salary directly to her bank account through a payment app. She refused and asked me to send the money to her son’s or husband’s account because they have smartphones and actively use payment apps, whereas she has neither. She also found it intimidating to visit a bank or ATM without a male relative. Upon asking, I found that this was a common story in most households in my housing society. What they are most comfortable handling is cash.

The gender divide 
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The gender divide 

Statistics tell a similar story. The All India Debt and Investment Survey (AIDIS) administered by the National Statistical Office provides an important measure of financial inclusion in India. The most recent survey (2019) includes gender-disaggregated data, which is a useful measure of how women own and use various financial instruments. As per the survey, 80.7% of women in rural areas and 81% in urban areas had deposit accounts in banks. This is an improvement over the 77% of women estimated to own bank accounts in India, as reported by the last Global Findex Report (2017), which surveys a similar demographic cross-section. The male-female gap in bank account ownership has reduced over the past few years thanks to the roll-out of Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts. Currently, a little over half of Jan Dhan account holders are women. But access to financial services in itself is not financial inclusion.

According to various research reports, 55% of women still don’t actively use their PMJDY accounts. Women from low-income households typically save small amounts in cash in one or many spots within their home, in chit-funds/bishis, and with their employers, friends and relatives. In addition, India has among the lowest female labour force participation rates in the world, at under 20%, having fallen to almost 16% in the pandemic-hit second quarter of 2020-21. Low usage of financial services can be attributed to low labour force participation and low earnings.

When it comes to adopting digital financial products like credit cards, debit cards, and payment wallets, the disparity between men and women is stark. As per the AIDIS survey, 20% of rural women have reported having debit or credit cards, compared to 64% of men. There is a 17% gender gap in card ownership even in urban areas. This is intriguing, as all PMJDY account owners should own a Rupay debit card.

The slow adoption of digital financial services by Indian women is also on account of the gender gap in mobile ownership and mobile internet usage. In India, the ownership of mobile phones by women is 20% less than that by men, and the usage of mobile internet is 50% less. In addition, only 14% of women in India are found to own smartphones. This significantly deters access to and the use of mobile-based digital financial services by women.

On the credit front, the loan rejection rate for women-owned businesses is 2.5 times higher than for men. Lack of collateral, difficult access to a guarantor, weak property rights and various cultural barriers collectively hinder them from availing loans for productive purposes. The very anticipation of rejection discourages women from even applying for loans. For providers of financial services, the perceived risk of lending to women is often higher than the actual risk. Additionally, certain cultural norms exclude some women from using formal financial services. Women in low-income households often leave their phones at home while leaving for work, have low digital literacy, and do not have complete autonomy in using their phones. Such adverse practices make phone-based transactions, transfers, and loan repayments a steep challenge for them.

Financially including women can have a far-reaching impact on their households as well as the country’s economy. Women in emerging economies reinvest 90% of their earnings in human resources such as education, nutrition and health.

There are three approaches we could adopt to effectively bridge the gender divide in achieving financial inclusion: Design gender-sensitive products, build a network of female banking correspondents, and publish gender-disaggregated data on financial inclusion.

Designing better products for women requires a client-centred approach, where providers start by identifying and understanding how women use and interact with money, financial products and technology. Design elements like vernacular communication and voice and video enablers can reduce friction for women in their use of digital financial products.

To mobilize small savings, we must create awareness about banking products and deliver these to last-mile women users, for which a robust network of female banking correspondents (BC) would be a major help. They are largely considered approachable by women customers, who would be willing to entrust them with sensitive financial information.

Lastly, the periodic publication of gender-sliced data on various parameters of financial inclusion can help in tracking the gender divide and also make a clear case for gender-sensitive products.

Monami Dasgupta is head of research initiatives at D91 Labs

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