How India could speed up the financial inclusion of women

Context: Over the past year, the covid-19 pandemic has thrown existing gender inequalities into sharp focus. There is a need for greater financial of women in India.

COVID-19 impact on gender inequality:

• Unemployment: 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.
  • 43% of women-owned enterprises surveyed reported monthly profit less than Rs 10,000, compared to just 16% of units owned by men.
• Exclusion error: more than half of India’s women poor missed the cash transfers under Pradhan Mantri Jan Dhan Yojana (PMJDY) due to a lack of gender-disaggregated data in the banking sector.

Challenges to financial inclusion of women in India:

• Exclusion and inclusion error under PMJDY: not all poor women have PMJDY accounts, and not all PMJDY accounts belong to the poor.
  • 55% of PMJDY accounts are owned by women, making for 232.1 million accounts
  • While 78% of poor women respondents reported having a bank account, just 23% reported owning a PMJDY account (Yale study).
• Gender gap: While the gender gap in account ownership has reduced from 20% in 2014 to 6% in 2017, in terms of usage of PMJDY accounts, it stands as high as 11%.
• Lack of gender-disaggregated data in banking and financial sectors: economic data is usually spliced by states, geographies (urban-rural) or sectors while ignoring the gender angle.
• Lack of women participation: women agents form less than 10% of the total agent network of Business Correspondents (BCs).
  • ‘Bank sakhis’ have worked well only in areas where self-help-groups (SHGs) are present.

Way forward:

• Generate gender-wise data: to fulfil India’s 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.
• Appointment of more women as BCs by banks: women will be more comfortable if women BCs meet them at their own homes.
  • Would help widen the spread of banking and enable the financial independence of women.
  • Facilitates women entrepreneurship, both directly, through credit, and indirectly, with BCs acting as role models.