I have, over the last few months, done a deep dive into the concept of Financial inclusion.
The result?
Numerous blogs cover the idea- what it means, what it measures, where we stand with regards to this as a country, what has been done so far towards this goal, different means of achieving it, and Rang De’s efforts toward financial inclusion etc.
However, there is something that eluded me from all of this research. I spent the last two days exploring different opportunities for investment, researching product after product, speaking to different people, and getting the right information. With pages and pages of notes, yet very little understanding of any of it, I gave up, exasperated at all the overload of information.
As I sat thinking about this, I realised how easy I had it. All the information I needed was at my fingertips, not just that, people were more than happy to help me out. That got me thinking if I was unable to make an informed financial decision, a decision that I had taken myself after weighing all the options that were available to me, what chance did those women with little to no access to knowledge about financial services across the country have?
The hurdle:
With overwhelming literature showing that men more frequently use financial products and services available to them, make decisions and take risks in India. Women are usually not aware of these financial products, have very little decision-making power in the household and are less likely to take any risks when it comes to their finances. A study done in 2019 shows that 77% of women in India have access to formal financial services, specifically bank accounts. However, among the 77% who have access to bank accounts, more than 42% of them have dormant accounts with no banking activity conducted over the last year. Access to bank accounts is just the issue at the surface. The more you scratch this layer, the deeper this issue gets. Even the women with bank accounts, use them only for receiving government subsidies, which is very often withdrawn by their husband or other family members. Financial products, saving and investing instruments are tools that have very rarely, if not never been used. There is, however, one instrument that has been extensively used to try and close the gender gap with regards to financial inclusion- loans for women from low-income households.
One of the biggest steps taken by the government as well as other financial programs in this regard is to provide loans to women-led SHGs to help them build a business and contribute to the household finances. However, this intervention has shown to have mixed results. While it did bring out women to learn and understand finances, it did not make them financially independent or confident to make their own choices. Very often, one or two members of the group were designated with handling the finances of the group while the others remained spectators. Another reason for this intervention not working very well was the lack of focus on individual financial as well as business needs. Everyone was to save the same amount and get the same amount of money as a loan even though their needs were drastically different.
Has this really changed?
The economies of a majority of South Asian countries have, in general, been historically characterised by gender disparity when it comes to access to financial services and products, education, security and healthcare. Therefore, the efforts toward closing the gender gap when it came to financial inclusion were influenced by both, economic and cultural facets. While there was generally a push towards empowering women in terms of providing them with access to bank accounts, asset ownership rights, livelihood generation etc, the lack of decision-making powers, illiteracy and many other cultural factors still continue to mar their progress towards financial independence.
The need of the hour is therefore not just to throw at these women an overwhelming amount of products, but to rather make them aware. Empower them to make an informed choice when it comes to the finances of their household.
Rang De has been working across partners to provide women with financial literacy, skill-building opportunities and access to credit and empower them to make independent financial choices for their businesses. You can support women investees by visiting https://rangde.in/women-entrepreneurs.