The Indian financial landscape is undergoing a dramatic change. India witnessed a surge in bank account ownership during the 2011-2017 period: 80 percent of Indians owned a bank account in 2017–an increase of 45 percentage points since 2011. This surge is primarily attributed to the Pradhan Mantri Jan Dhan Yojana (PMDJY).
However, this push for financial inclusion has not achieved its true objective, which is to ensure that all citizens not only have access to bank accounts, but avail other facilities that come with it–formal credit, insurance, and overdraft, to name a few.
According to the Global Findex database released by the World Bank, roughly one out of two bank accounts in India remain inactive, about twice the average of other developing economies. Worse, the gender gap in these inactive accounts is notable: 54 percent of women account holders report not using their account, as opposed to 43 percent male account holders.
This gap needs to be considered against the more general narrative on outcomes for women in India, and progress therein. While there has been a big shift in girls’ education in the last decade or so–with more girls enrolling in higher secondary and college education–India’s abominably low female labour force participation rates mean that many girls, despite their aspirations, are passing out of schools with no employment prospects.
The debate on low female labour force participation and the reasons for it are intensive, and have sparked an entire research industry. However a study we at SEWA commissioned as part of the World Bank’s Skill India Mission Operation (SIMO) focuses on the possible solutions, one of which is identifying work opportunities available for women in India’s financial sector.
Can the financial industry be a prospective employer for the many, now more educated women, seeking work outside their homes?
Why is this a matter of interest? Because evidence shows that women tend to use their bank accounts and save and borrow more if they are served by female bankers and financial intermediaries.
First, female staff comprise a very small proportion of the financial industry workforce. The Bharat Microfinance Report 2017 by Sa-Dhan reveals that the total microfinance workforce in 2017 stood at 89,785 workers. Women comprised only 12 percent of the total workforce and 11 percent of the total field staff.
Our primary study confirmed these dismal numbers on women’s employment in the financial sector. Most of the field agents and employees of the financial institutions we interviewed were male. Perhaps the most dramatic example was that of microfinance institutions where we found that while all the clients were women, all the officers in the field were male.
Second, SEWA’s own studies suggest that women tend to save and borrow more when they are served by female financial intermediaries.
A basic income pilot conducted by SEWA in the state of Madhya Pradesh in 2011-12 compared the extent of financial inclusion in villages where SEWA operated through its network of vitya saathis (female banking correspondents) and villages where SEWA was not present.
It was found that in non-SEWA villages where no basic income was transferred, women held only 24 percent of their savings in financial institutions such as banks and cooperatives (figure 1). In comparison, in SEWA villages, 64 percent of women’s savings were in formal financial institutions.
Other internal studies of SEWA in Bihar and Uttarakhand also show a positive impact of financial intermediaries on women’s savings, and livelihoods.
(The article was written by Renana Jhabvala, Sonal Sharma and Soumya Kapoor Mehta and first published in idronline.org)