Women contribute only 18% to the national GDP in India; and their workforce participation hovers around 27%. Among these, poor women are mostly self-employed; they are subsistence farmers and micro entrepreneurs, and while their work is critical for family well-being, they earn significantly less than men. Access to finance is an important impediment that keeps women out of the mainstream economy.
It is therefore imperative that for meaningful financial inclusion of women, focused and deliberate policy attention is given. In India, women have been the focus of the two significant microfinance channels – the MFI and the SHG Bank linkage model. The SHG bank linkage model is one of the largest microfinance programmes in the world that has linked unbanked women to formal financial institutions. Beyond this, there is no formal policy attention to financial services for women.
In terms of ownership of bank accounts, the gender gap in India had substantially dropped from 20% in 2014 to 6% in 2017 as per the Findex reports, largely due to the progress made under the Jan Dhan Yojana. By September 2019, 196.2 million PMJDY of the total of 368.9 million were of women. This however does not translate in visible any way to women beginning to benefit from financial inclusion. However outside of the SHG programme, there do not seem to be any other programmes and policies which promote and push flow of loans and access to other financial services specifically for women. One of the key policies to push loans to underserved segments is the Priority Sector Lending targets for banks. The government had set up the Bharatiya Mahila Bank for specific focus on women, which did not take off and was subsequently merged with the State Bank of India. The PM Mudra Yojana promotes loans to micro and small enterprises, without any specific targets or focus on women.
The session discussed whether there is adequate, deliberate focus on reaching women with financial services within the current policies and schemes aimed at promoting financial inclusion. It provided recommendations for policy consideration to enable meaningful inclusion of women, particularly from poor and low income segments, in the mainstream financial sector. The session touched upon MoRD’s experiences, challenges and core strategies pivoted across NRLM and other financial inclusion policy framework in leading the economic development campaign and advancing financial inclusion for women. The session also discussed on Ministry of MSME’s effort in bringing focus on access to finance for women enterpreneurs. The session had detailed discussion on product suitability, need for women specific financial institutions and partnerships for facilitating better coverage for women.
- While the financial services access points with respect to basic credit is largely available to women as customer segment, quality of financial services and diversity of products offered needs to be improved.
- There is a glaring need for infusing gender bias (tilted towards women) by way of appropriate incentives and subsidies in policies, which are otherwise designed gender neutral. Such positive bias opens up opportunities both at supply and demand side to increase women participation in financial inclusion spectrum.
- Women do not shy away from using technology platform; the retention and sustained usage rate of technology is significantly better than for men as customer segment. Hence JAM trinity holds immense potential in reducing the gender gap in financial inclusion.
- While lower ticket micro-loan segment is largely dominated by women borrowers on group-backed models, there is need for higher order loan sizes for individual women and women owned enterprises.
- One-size-fits-all approach might not work while providing services targeted for individual enterprises unlike micro-credit.
- The shift of focus on ecosystem development and not just product development is critical. Similarly shift of focus of policy makers from manufacturing sector to trading and services sector has brought spotlight on women as target beneficiary.
- Market intervention, technology skilling and regulatory framework needs to be conducive for making women as an entrepreneurial and economically active segment. Economically vibrant women and women businesses presents itself as financially viable value proposition for financial institutions to pursue after.
- There is need to aggregate smaller women enterprises by way of producer companies for efficient delivery of services and usage of financial and other resources.
- For making finance work for women, there is an accentuated need for strong relationship between financial institutions and communities. This relationship has to be routed through community resource persons or similar cadre of Feet-on-Street who can help break the opaqueness of operating environment of small, micro and dwarf enterprises. It will bring comfort to many mainstream commercial financial institutions as more information is made available about the enterprises.
- Concerted effort to break the information asymmetry around availability of various schemes, products and bouquet of benefits is also critical to create empowered and informed demand from women.