The Global Findex of 2017 illustrates a progressive trend in financial inclusion throughout the world.However, the findex stops at the point of financial accessibility, and there is actually a shortfall in financial inclusion as women within the economy tend to possess a formal bank account which is mostly in aninactive or dormant condition. Thus, by understanding the contrast between the terms ‘financial inclusion’ and ‘financial accessibility’, it can be seen that India has attempted to bridge the gap which existed within account ownership, without making any significant changes to functionality of the accounts.
Comparison between the 2014 and 2017 global findex data evinces that India has made substantial progress in bridging and reducing the gender gap from 20% to 7%,within aperiod of 3 years. This has been achieved through making aadhaar card as a mandatory document for availing an account in a formal financial institution. But in contrast much difference hasn’t been made to change the prevailing predicament, which is the lack of documentation in case of women, as they mostly work within the informal sector. Further, a report by Quartz India states, “In India, where 90% of unbanked adults reported having proof of identity issued by the national government, recent research suggests that government-provided biometric identification cards were among the factors enabling a rapid decline in the number of adults without an account”. This diminishing trend has its association with threats of breach of aadhaar data. Further, this trend might induce futility among the civilians with regard to the banking services which might affect the aggregate deposit, with a recent report by RBI stating that “Banking system is witnessing steady withdrawal trends”. A similar condition emerged in Pakistan as women were sceptical about sharing their mobile number for availing an account. To break the ice, Jazz Cash came up with a women-friendly financial design which would go hand in hand with the cultural and societal needs. This is necessary in the case of India as well, where Ujjavin Financial Services is already in the process of designing it.
Though India has achieved path breaking progress in terms ofthe number of accounts owned, this is contrasted by Live mint stating that “India’s share of inactive accounts, at 48%, is the highest in the world, the World Bank notes in its report based on the survey”. Within the given figures, the percentage of women holding an inactive account is colossal. There can be multiple reasons for this phenomenon, such as women being paid less compared to men (glass ceiling) or maintaining an account in a formal financial institution being a taxing luxury for women due to requirements like maintenance of minimum balance, payment of maintenance charge, travel charges and service chargesetc. Worsening this condition, earlier this month, banks were asked to pay services taxes and interest on free services (cheque transactions, ATM withdrawal and drop etc) offered to the customers. As a response to this notice by the government, banks are in the process of ceasing the free services, which would aggravate this situation. With the cessation of free services, there would be no incentive for the people, especially for women (due to the above mentioned reasons) to transact using formal institutions, and an article by India Today states that the bank deposit growth rate has hit its lowest since 1962-63 at 6.7%.
According to GBA bank report, less than 15% of women entrepreneurs in India have access to finance in the form of credit from any formal banking institution. Reasons for underperformance of women in seeking credit from formal institutions would be due to many like cultural barrier etc, but the importance of documents (payslip, collateral etc) for the purposes of seeking a loan also makes a difference. To understand this relationship with documentation, it is necessary to understand the labour market of the country. In most of the South Asian countries, women tend to work in/belong to the informal sector where their wages are not regulated and there is no accountability and documentation for the work they do. Further, banks don’t recognise the SMEs (Small and medium sized enterprises) mostly. Thus, with the lack of recognition and formal documentation (like pay slip for account opening/ job security for credit) women’s access to credits from formal financial institutions is restricted.