In a country with considerable disparity between men and women, the Global Findex of 2017 illustrates a progressive trend in bridging the gender gap. However, the Findex stops at the point of financial accessibility where there is a shortfall as women within the Indian economy tend to possess a formal bank account which is mostly in an inactive or dormant condition.
It can be seen that India has attempted to bridge the gender gap in account ownership between men and women.
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 partly through making India’s Aadhaar card a mandatory document for opening accounts in financial institutions. The card is a 12 digit unique identification number given to the residents of India based on their demographic and bio-metric data. Around 1.19bn Indian citizens currently hold an Aadhaar card.
But in contrast, improvement has been slow in helping those women working in informal sectors. A report by Quartz 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”.
One barrier to banking is the threat of breaches to Aadhaar data. This fear could discourage civilians to from availing 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 lack access to mobile phones, a key technology in current financial inclusion strategies 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.