In a country with considerable disparity between genders, the Global Findex of 2017 illustrates a progressive trend in bridging the gender gap in India. 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 inactive or dormant.
It can be seen that India has attempted to bridge the gender gap in account ownership between men and women in multiple ways:
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% in a relatively small period of three 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 Indian residents based on their demographic and bio-metric data. Around 1.19bn Indian citizens currently possess 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. A similar condition emerged in neighbouring Pakistan where only 36% of women have access to mobile phones, a key technology asset in current financial inclusion strategies. To break the deadlock, companies like Jazz Cash have sought to attract female customers and address cultural and societal needs. In India, companies like Ujjavin Financial Services are also investing in the same strategy.
Though India has achieved progress in 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…”. There can be multiple reasons for this phenomenon, such as women being paid less compared to men, or the maintenance of a minimum balance in bank accounts, or maintenance, travel and service charges.
Earlier this month, banks were asked to pay services taxes and interest on previously free services like cheque transactions and cash machine withdrawals. As a response to this, banks are in the process of ceasing free services. With the cessation of free services, there would be fewer incentives for customers to transact using formal institutions. An article in India Today states that the bank deposit growth rate has hit its lowest since 1962-63 at 6.7%.
According to a Global Banking Alliance for Women 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 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.
In many South Asian countries, women tend to work within the informal sector where their wages are not regulated and there is little 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 the access to credit from formal financial institutions is restricted for many women.