By Renana Jhabvala, Sonal Sharma, and Soumya Kapoor Mehta:
The Indian financial landscape is undergoing a dramatic change. India witnessed a surge in bank account ownership during the 2011-2017 period: 80% 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% of women account holders report not using their account, as opposed to 43% 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 1 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% of the total workforce and 11% 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% of their savings in financial institutions such as banks and cooperatives (figure 1). In comparison, in SEWA villages, 64% 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.
Putting these two facts together, it is clear that hiring women as financial intermediaries can serve the dual purpose of increasing women’s usage of bank accounts on one hand, and their employment on the other.
According to the Reserve Bank of India (RBI), of the nearly 460 million basic saving accounts opened in scheduled commercial banks between March 2010 and March 2018, nearly one in every two was opened through business correspondence agents or financial intermediaries. Such is the importance of these agents that the National Skills Development Corporation (NSDC) estimates 3.7 million incremental jobs for financial intermediaries between 2016 and 2022.
This leads to three important policy insights:
Yet, a report by the Helix Institute of Digital Finance (2015) on the Indian financial agent network finds that of the 2,682 active financial agents surveyed across rural and urban locations, only about 10% were women.
If these levels were raised to 30%, then of the 3.7 million projected jobs, 1.1 million could be taken up by women financial intermediaries, benefitting women account holders in the process.
It is clear that most of the obstacles cited above seem to be related to the socially determined roles that women have been traditionally assigned. Both men and women view women’s abilities and aspirations through these lenses. This determines why women are either unaware of the opportunities, or are hesitant to enter the field. It also illuminates why managers fail to encourage women to apply, or when they do apply, only assign women back-office jobs.
These barriers call for more awareness campaigns in communities about the importance of employment for women. Equally, some supply-side shifts are needed.
They may include:
At the policy level, it requires partnerships between organisations like the NSDC, the Sector Skill Councils and the Association of Banks to create an ecosystem that works towards employing more women as financial intermediaries.
It also requires the collection of gender-disaggregated data by financial institutions on employees, agents, banking correspondents, customer service providers and other financial intermediaries and making these figures publicly available to track gender discrepancies in the sector.
*Sanchita Mitra was a contributing author to the larger study that this article draws on.
This article was originally published on India Development Review.
About the authors:
Renana Jhabvala: Renana Jhabvala is an economist, with a 40-year-long association with the Self-Employed Women’s Association (SEWA), known for her writings on informal women workers. She served as the Chancellor of Gandhigram Rural University from 2012-2017. She was a member of the UN Secretary General’s High-level Panel on Women’s Economic Empowerment, and has also been honoured with the FICCI Lifetime Achievement Award. In 1990, she was awarded a Padma Shri by the Government of India.
Sonal Sharma: Sonal Sharma is an urban development practitioner who works on issues of informality, gender and land rights. She currently leads monitoring, evaluation, and learning for an urban land rights project for women workers in the informal economy at SEWA Bharat. Previously, she has worked with SEWA’s affordable housing finance company and researched on the issue of manual scavenging. She was an Urban Fellow at the Indian Institute for Human Settlements, and has completed her MA in Development Studies from Ambedkar University.
Soumya Kapoor Mehta: Soumya Kapoor Mehta is a development economist who has been writing on issues of poverty, social inclusion, social protection, and female labour force participation for the past 15 years. Formerly with the World Bank, she has several articles, World Bank and UN reports, and two books to her credit including one on the potential of basic income as a policy for India. Soumya holds degrees in economics from the University of Cambridge and St Stephen’s College, Delhi.