Financial inclusion can reduce gender gaps in India

Financial inclusion plays a crucial role in advancing the economic empowerment of women, which is a key objective outlined in the fifth Sustainable Development Goal concerning gender equality. In India, approximately one out of every five women lacks access to a bank account. Despite the country’s initiatives aimed at enhancing financial inclusion, significant disparities persist in terms of account utilisation, as well as access to savings and credit facilities among women. Various obstacles hinder women from accessing financial services, including difficulties in providing proof of identity or owning a mobile phone, residing far from bank branches, and requiring assistance opening and efficiently utilising bank accounts.

Here are some ways to empower women and bridge the gender gap, leading to their financial inclusion.

· The traditional banking system faces challenges in serving underprivileged communities, particularly women, due to limited physical presence and cumbersome paperwork. However, fintech firms are revolutionising financial services by leveraging technology. The platforms are making banking more accessible, affordable, and user-friendly, empowering women and other underserved groups. Initiatives like Digital India and the Unified Payment Interface (UPI) have facilitated financial access via smartphones. By embracing innovations such as digital wallets, mobile money, and peer-to-peer lending, fintech is bridging gaps and enhancing financial autonomy for women. The Reserve Bank of India’s Financial Inclusion Index reflects this progress, rising from 43.4 in 2017 to 56.4 in 2022. Through these efforts, women gain critical credit access, fostering economic empowerment and independence in their entrepreneurial pursuits. It is imperative that others follow the best examples presented by the fintech industry.

· Financial literacy programmes can play a crucial role in promoting financial inclusion in India by equipping women with essential knowledge about cash management, savings, banking, insurance, and investment tools. By understanding these concepts, women gain confidence in handling their finances effectively. Traditionally, women manage household budgets and are often eager to start home-based businesses. Financial literacy programmes can break down barriers by providing practical skills and insights, enabling women to participate actively in economic activities. Furthermore, India’s digital financial revolution has been instrumental in reaching women across diverse backgrounds. By promoting digital literacy, women can access banking services, transfer money, and make payments seamlessly. This shift toward digital platforms fosters financial inclusion and empowers women to take charge of their financial well-being. Financial literacy also encourages the design of products tailored to women’s needs. These products address specific challenges faced by women, such as flexible repayment options, micro-loans for entrepreneurial ventures, and insurance coverage for health and livelihoods. Financial literacy programmes need a greater push in order to empower women and enhance their financial decision-making abilities. These will then be able to contribute significantly to reducing gender disparities in India’s financial landscape.

· Gender-responsive policies in the financial sector are essential for promoting gender equality and ensuring that women have equal access to financial services. These policies address critical areas such as credit, land ownership, and inheritance laws. One such example is Pradhan Mantri Mudra Yojana (PMMY). Under this, collateral-free loans are offered to micro and small enterprises, including women entrepreneurs. It encourages financial institutions to extend credit to women-led businesses. Another significant measure to enable women’s empowerment is encouraging joint ownership of land titles, as it ensures that women have legal property rights. States like Karnataka have implemented policies to issue joint titles to married couples, promoting gender equity in land ownership. By ensuring equal access to credit, land ownership, and inheritance rights, India takes significant strides toward bridging gender gaps in financial services.

· In this light, the role of microfinance institutions cannot be ignored. Microfinance, characterised by providing small loans to individuals who lack access to traditional banking services, has emerged as a powerful tool for fostering financial inclusion and empowering women. These institutions recognise the unique challenges faced by women entrepreneurs. By offering customised financial products, such as microloans with flexible repayment terms, they address specific needs related to income-generating activities. These loans empower women to start or expand small businesses, invest in livestock, or purchase equipment, thereby enhancing their financial independence. They need regular government support and encouragement. Microfinance schemes also encourage women to explore entrepreneurial ventures. Whether it’s setting up a small shop, running a cottage industry, or providing services within their communities, these initiatives provide the necessary capital. Women gain confidence, learn business skills, and contribute to household income, breaking free from traditional gender roles. Beyond financial gains, microfinance fosters social transformation. As women become active participants in economic activities, they challenge societal norms and gain decision-making power. This ripple effect extends to their families and communities, promoting gender equality and women’s agency.

· Financial inclusion is not just about access to banking services; it’s about creating pathways for economic empowerment and social change. Engaging communities plays a pivotal role in achieving this goal, especially when it comes to women. Community-led awareness campaigns are essential to educate women about their financial rights and opportunities. These campaigns can address cultural norms that limit women’s participation in financial matters. By organising workshops, seminars, and outreach programmes, communities can empower women with knowledge about savings, credit, and investment options. Peer support networks within communities provide a safe space for women to share experiences, learn from each other, and build confidence. These networks can offer financial literacy training, mentorship, and encouragement, helping women navigate financial systems effectively.

Cultural stereotypes often perpetuate the idea that women are financially dependent or incapable of managing money. Community-driven initiatives can challenge these stereotypes by showcasing successful women entrepreneurs, leaders, and role models. When women see others like them breaking barriers, it inspires confidence and motivates them to take control of their financial futures.

This article is authored by Dr. Rashmi Saluja, executive chairperson, Religare Enterprises Limited.