A bank account for women is not enough

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 in India. This is evident
in half of the new accounts being inactive, especially for women account
holders.1

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 continuously evolving formal financial
space, especially when it is online and digital. They also have limited
literacy levels, constrained mobility and access to public spaces, and are
intimidated by the male dominated physical banking space and the English
dominated online financial interfaces.

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 of
Financial Literacy and Counselling Centres (FLCCs) by lead 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 as much as possible from the programme, it is important to understand
why financial exclusion for women is different from financial exclusion 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.

The programme
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
trainings. Each woman received an average of 30 hours of training over 15-18
months. The trainers were chosen from amongst the community and trainings were
followed by financial linkages, mass awareness camps, exposure visits to ATMs
and banks, which helped these women to link with financial products and
services of their choice.

The independent
endline evaluation of the programme revealed a number of benefits for women.
The trainings and exposure visits raised their confidence in dealing with
formal financial institutions, enabled them to play greater role in household
financial decision-making, and resulted in positive change in attitude of male
members who attended the trainings. In terms of numbers:

1. Subscription to local ponzi schemes went down
   from 32 percent to two percent.
2. The number of women contacting their local
   microfinance institution staff for assistance rose from 41 per cent to 66 per cent,
   as women began to understand grievance redressal mechanisms.
3. There was an improvement in awareness of
   MNREGA benefits; it rose from 13 to 33 per cent.
4. 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

Having helped
build the financial capabilities of more than five lakh women in four states we
learnt a great deal about financial capability building for low-income women
across geographies, and in diverse languages.

Programme
design

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 helps in better retention of
financial concepts by 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 frontline workers to create awareness and demonstrate usage of
such platforms.

FLWE programmes
generate increased demand for financial services. However, when women face
problem in accessing these services through local institutions, it demotivates
them and erodes their confidence. It is therefore important to bring all
stakeholders — like local bankers, government departments, and panchayat office
bearers — on one platform in the community. This can be effectively 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 stress periods and financial emergencies, as the
programmes improved savings, provided the women 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 better understanding
about accessing relevant financial products from right institutions. It also
leads to significant reduction in vulnerability to financial frauds and ponzi
schemes.

There was a
significant change in women’s perception. Prior to the training, women
perceived financial products as a ‘luxury’, suitable only for the better-off
households.

Women with very
low levels of family income and very low levels of education benefitted
significantly from the trainings imparted. The evaluations confirm the highest
value of training for the most disadvantaged segment.

More
participation by men in trainings encourages joint decision-making at a 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 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.

Footnotes

54 per cent of
women account holders reported not using their account, as opposed to 43 per cent
male accountholders.

(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)

This article was
originally published on India Development Review and can be viewed here.

Also Read: Women and work: Examining India’s policy landscape