In recent times, financial inclusion has received tremendous attention from policymakers as a development objective. They see it as a prime facilitator for the efficient delivery of social programmes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), or other Direct Benefit Transfer (DBT) enabled schemes. As a result, achieving greater financial inclusion now tops the policy priorities for inclusive growth in India.
And this focus shows up in the numbers. The percentage of adults who have a bank account in India increased to 80 per cent of the population in 2017, up from 53 per cent in 2014.
The Pradhan Mantri Jan Dhan Yojana (PMJDY), which was announced in 2014, helped open 36 crore bank accounts, with over 50 per cent of these account holders being women. The gender gap in account ownership has also shrunk from 20 per cent three years ago, to six per cent today.
However, a closer look at these numbers reveals gaps, primarily around usage. While access may have improved with supply-side efforts, demand-side efforts for financial inclusion still attract little focus and investment. This is evident in half of the new accounts being inactive, especially for women account holders.
One of the primary barriers to active usage of formal financial services is the lack of financial literacy. Women in rural areas have limited or no access to information on how to engage with the evolving formal financial space, especially when it is online and digital. They also have limited literacy, constrained mobility and access to public spaces, and are intimidated by the male-dominated physical banking space and the English dominated online financial interface.
In a country where 23.5 per cent of rural households have no literate adult above the age of 25 (one of the categories of deprivation measured by the Socio-Economic Caste Census 2011), and of the 64 per cent literate rural Indians, more than a fifth have not even completed primary school; it is not only important—but essential—to have a systematic platform for financial education.
The inability to understand and engage conveniently with the formal financial space has huge implications on the financial behaviour of these households. This is further exacerbated by language, connectivity, and socio-cultural barriers.
National-level efforts to enhance financial literacy have been focused on setting up Financial Literacy and Counselling Centres (FLCCs) by leading banks of a district. FLCCs are meant to be the district-level structures for imparting financial education. However, they have not been very effective, especially given their camp-based approach to financial education and limited outreach.
Financial exclusion for women is different from that for men
To make sure women benefit from the programme, it is important to understand why financial exclusion for them is different from that for men.
SIDBI’s PSIG programme, supported by the Government of UK, offers key insights into how a gendered approach to financial education and capacity building has a positive ripple effect on household health, sanitation, education, and other key socio-economic indicators.
The Financial Literacy & Women Empowerment (FLWE) programme comprised pilot and scale-up programmes on gender and financial capability building and was implemented in four states—Uttar Pradesh, Bihar, Madhya Pradesh, and Odisha.
It focused on capacity building of rural women on gender issues, their rights and entitlements, basic health, sanitation, and a detailed module on financial well-being. It used a mix of classroom teaching, learning by doing, audio-visuals, and technology-based interactive platforms for delivering training.
Each woman received an average of 30 hours of training over 15-18 months. The trainers were chosen from among the community and the training sessions were followed by financial linkages, mass awareness camps, exposure visits to ATMs and banks, which helped the participants link with financial products and services of their choice.
The independent end-line evaluation of the FLWE programme revealed several benefits for women. The training and exposure visits raised their confidence in dealing with formal financial institutions, enabled them to play a greater role in household financial decision-making, and resulted in positive change in the attitude of male members who attended the sessions.
In terms of numbers:
- Subscription to local Ponzi schemes went down from 32 per cent to two per cent.
- The number of women contacting their local microfinance institution staff for assistance rose from 41 per cent to 66 per cent, as they began to understand grievance redressal mechanisms.
- There was an improvement in awareness of MNREGA benefits; it rose from 13 to 33 per cent.
- Clients opting for insurance increased from 53 per cent to 85 per cent.
Key learnings about building financial capability for low-income women across geographies and languages
Here’s what we learnt while helping build financial capabilities of more than five lakh women in four states across geographies, and diverse languages.
Financial capability programmes have to be integrated with gender issues to effectively address barriers to women’s financial inclusion. Gender-integrated FLWE programmes have strong returns, not only in terms of improved financial behaviour but also improved mobility and higher confidence.
Behaviourally-informed content and visual aids using storytelling help in better retention of financial concepts in women.
Mobile IVR-based short episodes on FLWE are also effective in providing customised need-based learning. However, it has to be complemented initially with on-ground volunteers and front-line workers to create awareness and demonstrate the usage of such platforms.
The programmes also generated an increased demand for financial services. However, when women face problems in accessing these services through local institutions, it demotivates them and erodes their confidence.
It is therefore important to bring all stakeholders—local bankers, government departments, and Panchayat office bearers—on one platform in the community. This can be effectively done through mass awareness camps where the local functionaries interact with the local community about financial services and products.
Outcomes for women
Women were able to cope better during stressful times and financial emergencies, as the programmes improved savings, provided them with an understanding of entitlements under government schemes, and access to financial security measures like insurance and pension.
Financial capacity building, followed by financial linkages leads to a better understanding of accessing relevant financial products from the right institutions. It also leads to a significant reduction in vulnerability to financial frauds and Ponzi schemes.
There was a significant change in women’s perceptions. Before the training, they perceived financial products as a ‘luxury’, suitable only for better-off households.
Women with very low levels of family income and equally low levels of education benefited significantly from the training. The evaluations confirm the highest value of the training for the most disadvantaged segment.
More participation by men in the training session encourages joint decision-making at the household level. However, given field realities and socio-cultural taboos, it is difficult to ensure regular participation of men and women at the same time.
Women’s lack of independent disposable income is the key barrier to the increased usage of financial products. The FLWE programmes witnessed an overwhelming demand from women for skill development and income-generating activities. Our research corroborated that active account usage, and usage of financial products increases if women are gainfully employed.
There is an urgent need for greater investment on the demand side of financial inclusion using gender-integrated approaches to financial capability building, so we can extend the gains of more women having bank accounts, to more women meaningfully using important financial services like insurance, credit, and the next frontier of cashless and mobile financial services.
54 per cent of women account holders reported not using their account, as opposed to 43 per cent male account holders.
Sonal Jaitly is Theme Leader, Gender and Financial Literacy, at the Small Industries Development Bank of India’s (SIDBI) Poorest States Inclusive Growth (PSIG) programme. Her work focuses on integrating a gender perspective into policies and programmes, and gender equality in the financial system for women’s financial inclusion and economic empowerment. She has previously worked with UN Women, where she led programmes for ending violence against women in public spaces, and use of technology to bring about change. She has authored and contributed to several reports on gender equality, and her writing has been featured in The Washington Times.