New Delhi: With 56% women as Jan-Dhan account holders, facilitation of loans for about 1 lakh women entrepreneurs to fund their start-ups in the past six years, over 23 crore MUDRA loans to women beneficiaries and an estimated potential of Rs 250 billion deposits that public sector banks could attract by serving 100 million low income women alone, India’s landscape of financial inclusion for women is at the cusp of transformative changes. A series of concerted efforts from the public and private sectors have driven innovation and improved the delivery of services which have allowed women across the country to gain access to formal financial services and improve engagement in the formal economy.
Though India began its financial inclusion journey as early as in 1956 with the nationalisation of life insurance companies followed by that of general insurance companies in 1972 and nationalization of banks in 1969 and 1980, women have remained excluded from the national agenda as a disproportionately large share of the world’s unbanked and underserved population lagging behind in active usage of financial products and services. As per the World Bank Global Findex report of 2017, about 23% of women in India lacked access to formal financial services, while 55% do not use their bank accounts actively. According to the World Economic Forum’s Global Gender Gap Report 2021, India slipped 28 places to rank 140th in 2021, the gender gap widened from 66.8% in 2020 to 62.5% in 2021. Women owned only 35% of all deposit accounts in scheduled commercial banks (SCBs) in 2021 and share of individual female borrowers in total credit was 31% in the number of credit accounts, as of September 2021.
The tide is now turning with an active global movement towards adoption of a formal national financial inclusion strategy over the past decade and setting this objective as a critical indicator of development as well as an enabler for at least eight of the 17 sustainable development goals (SDGs). This has prompted, in India, a growing opinion and evidence on financial inclusion of women enabling greater control over their financial lives, engagement in productive economic activities and boosting overall growth and output at the national level. India’s National Strategy for Financial Inclusion 2019-2024 (NSFI) initiated in June 2017 under the aegis of the RBI’s Financial Inclusion Advisory Committee charts specific goals and strategy to reach the goals and the mechanism to measure progress. According to Chairman of Reserve Bank Innovation Hub (RBIH) Kris Gopalakrishnan, reducing the gender gap requires putting a gender lens on financial service design. “Without fully including women, we won’t solve financial inclusion at its core, and promote shared prosperity,” Gopalakrishnan states in an RBI White Paper on Gender and Finance in India.
The push is evident in the results. The RBI’s annual Financial Inclusion Index (FI-Index) improved by 10.5 points from 2017 to 2021, indicating deepening financial inclusion in India. Between 2014 and 2017, India’s gender gap in access to bank accounts fell from 20 to 6 percentage points. The impetus was provided by the Pradhan Mantri Jan Dhan Yojana (PMJDY), which has put Indian policy making on mission mode since its launch in August 2014. The plan to leverage on the existing large banking network and technological innovations and shift focus from opening accounts for “every household” to “every adult” has been a game-changer in the financial inclusion space of India, especially for women.
As per latest official data, over 46 crore accounts have been opened with 67% in the rural and semi-urban districts and 56% are owned by women. The average deposit amount in PMJDY accounts has increased by nearly three times, from Rs 1,279 in 2015 to Rs 3,761 in 2022. The scheme offers overdraft of Rs 10,000, accidental death-and-disability insurance cover, term-life cover and old-age pension and these accounts serve as the default channel for delivery of government payments through the direct benefit transfer system which uses the JAM trinity (Jan Dhan, Aadhaar, Mobile) to deliver the benefits. In what was perhaps the government’s most ambitious cash transfer programme yet, it transferred Rs 500 per month, for three months, to women to support households during the pandemic in 2020, facilitated in no small measure by the availability of data under PMJDY, as shows a research by the Yale Economic Growth Centre.
The government is finding partners to deepen the inclusive agenda of PMJDY like the Bank of Baroda, which has tied up with Women’s World Banking to roll out the third phase of the Baroda Jan Dhan Plus programme across 25 districts of Uttar Pradesh and all 13 districts of Uttarakhand aimed at encouraging savings. Under this scheme for its wide base of existing Jan Dhan customers, the Bank of Baroda through financial literacy camps and business correspondents will encourage women account holders to deposit Rs 500 monthly for five months, building a relationship that can lead to a PMJDY overdraft loan facility of up to Rs 10,000. The programme will also train and work with over 2,000 business correspondents (BC) and 1,000 BC Sakhis (women business correspondents) to empower them to help women customers in their regions.
As part of the strategy to widen financial inclusion, RBI is setting up small finance banks (SFBs) for provision of a savings vehicle and supply of credit to small business units and micro and small industries through high technology-low cost operations. “Expanding bank’s outreach is the key foundation for a successful financial inclusion strategy,” Sunanda Sharma Lead, Financial and Digital Inclusion, AU Small Finance Bank told The Sunday Guardian. “The RBI mandates 25% of touchpoints to be present in the unbanked rural centres (URC) for SFBs, hence realizing the scale of development in underserved India, we have 30% of our touch points, that is 304 branches in unbanked rural centres which serve Tier-VI population of less than 5,000 and Tier-V population of less than 10,000. As on 31 December 2022, AU SFB has 456,000 live women bank account customers and 274,000 live women borrowers (this includes co-borrower and guarantors),” Sharma told The Sunday Guardian. “We also serve 52 special focus districts with 93 touchpoints covering 24 aspirational districts, 14 left wing extremist affected districts, 13 districts in hill states and 1 north eastern region,” Sharma added.
Taking the inclusive agenda deeper into the country, the Pradhan Mantri Mudra Yojana (PMMY) has enabled women to stand on their own feet, points out Rajib Kumar Sen, Senior Adviser at Niti Aayog. The PMMY, a scheme to finance small business enterprises has, since its launch in April 2015, enabled lending institutions to finance micro entrepreneurs up to Rs 10 lakh. “Annually, about Rs 1 lakh crore has been disbursed to women under the MUDRA loans and the Prime Minister’s Employment Generation Programme (PMEGP) has provided pathways to help women to set up their own enterprise and fulfill entrepreneurial aspirations. So far, annually, 20,000 women entrepreneurs are being provided loan on an average,” Sen told The Sunday Guardian.
Women now also have better uptake rates of insurance under the universal insurance coverage scheme of PM Jeevan Jyoti Bima Yojna (PMJJBY). With low representation of only 21.2% of the labour force in India and lower earnings, women’s risk profile has remained underserved by the insurance sector. Of the 2.88 crore life insurance policies sold in 2019-20, women’s share was at 32% in the number of policies. The proportion of women’s policies in the case of private life insurers was 27% and that of LIC was 34%. Things have improved under PMJJBY. As of 31 January, 2020, 40.70% of enrollments and 58.21% of claim beneficiaries under PMJJBY are women. With 95% of Indian women working in the unorganized sector and lacking pension coverage, the Atal Pension Yojana (FY 2019-20) has driven in an uptick in women subscribers who account for 43.14% (9,620,622) of the total registered 211.42 lakh subscribers.
Despite these private endeavours and Government schemes which have successfully brought a vast majority of women under the umbrella of formal financial services for the very first time, regular uptake of these services by women still remains a challenge. India’s private sector is coming forward to leverage technology to enhance the economic and social opportunities for rural women artisans in India who, based mostly in rural areas of India, have limited market intelligence, inadequate channels to sell their products, low capital and limited digital access. The NASSCOM Foundation, part of the industry body representing the Indian tech industry, and Firstsource, a global provider of business process management services are providing digital training for rural women entrepreneurs in Madhya Pradesh. As part of the first cohort of the project, 150 women artisans from Bagh community were trained to use digital communication tools, financial and entrepreneurship skills. Women entrepreneurs were equipped with tools to transition their businesses online, leverage social media platforms, make online transactions, and claim benefits from government schemes. The second cohort of the project to digitally enable women artisans will begin next year.
Sharma’s AU Small Finance Bank is working to fill the critical gap of financial literacy of women with a financial curriculum that makes them ready to access, use and benefit from the available financial products in the market. “We have organised 400+ financial and digital literacy camps at rural branches in Q3 FY23, participated in the nationwide intensive awareness campaign by RBI and conducted 136 camps under the campaign,” Sharma told The Sunday Guardian. The momentum created by policy responses and the consequent shift to digital services, offers the opportunity to address the gender gap in financial inclusion in India. The challenges need to be addressed through appointing more women business correspondents as women prefer visiting a female BC and deepening convergence with self-help groups, promoting digital credit for medium and small businesses which can expand the financial access for women.