The Global Findex of 2017 illustrates a progressive trend in India’s performance with bridging the gender gap. However, the findex stops at the point of financial accessibility, and there is actually a shortfall in financial inclusion as women within the Indian economy tend to possess a formal bank account which is mostly in an inactive 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.
Comparisons between the 2014 and 2017 Global Findex data demonstrates that India has made substantial progress in bridging and reducing the gender gap from 20% to 7%,within a period of 3 years. This has been achieved through making aadhaar card (please explain what aadhaar is) as a mandatory document for availing an account in a formal financial institution. Aadhaar card is 12 digit unique identification number given to the residents of India based on their demographic and bio-metric data, around 118 crore citizens of the country hold an aadhaar card. But in contrast improvement has been slow in changing the prevailing predicament, which is the lack of documentation in the 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 bio-metric 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 (Can we link to a news story here?) threats of breach of aadhaar data. Further, this trend might discourage among the civilians with regard to the banking services which might affect the aggregate deposit, with a recent report by the Reserve Bank of India stating that “Banking system is witnessing steady withdrawal trends”.
A similar condition emerged in neighbouring Pakistan as women were concerned about sharing their mobile number with financial institutions in order to open bank accounts. To break the ice, Jazz Cash came up with a friendly financial design which aims to attract female customers and address 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 progress in terms of the number of accounts owned, this is contrasted by a report in Live Mint which says 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, or maintaining an account in a formal financial institution being taxing due to requirements like the maintenance of a minimum balance, payment of maintenance charges, travel charges and service charges.
Worsening this condition, earlier this month, banks were asked to pay services taxes and interest on free services like cheque transactions and cash machine withdrawals. As a response to this, 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 customers to transact using formal institutions. 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 report , less than 15% of women entrepreneurs in India have access to finance in the form of credit from any formal banking institution. The reasons for the shortage of women seeking credit from formal institutions could be due to cultural barriers, but also the difficulty of sourcing documents such as payslips as well as collateral for the purposes of seeking a loan makes a difference.
In many South Asian countries, women tend to work within 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 recognize 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.