Bharatiya Mahila Bank will help improve financial inclusion | comment | Hindustan Times
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Bharatiya Mahila Bank will help improve financial inclusion

comment Updated: Nov 20, 2013 23:15 IST
Bharatiya Mahila Bank

Financial freedom is not measured by how much money one earns while working, or accumulating riches and buying means of comfort. Rather, it is more about having a wide set of options to choose from. Till about 20 years ago, one could count on the finger tips the number of successful business start-ups.

With low-risk appetite, financial management was a placid activity. The reason: there was very little freedom in the choice of financial instruments.

While the rising number of business start-ups mirrors the freedom to choose when to work and freedom to do what one likes, there is also the larger question of freedom to 'borrow' one's way out of abject poverty.

India is replete with stories of young girls dropping out of school and married off soon after by poor parents. Financial inclusion has a direct correlation with overall economic growth - a useful guide in times of crippling slowdown.

In its conventional definition, financial inclusion means making available banking services at an affordable cost to low-income and disadvantaged groups of people.

Any such blueprint, besides covering the rural poor, should also seek to bring within its ambit the large number of poor women in towns and cities who remain outside any formal banking network.

Access to banking services is critical for the economic empowerment of women in a country such as India. According to the World Bank's Global Financial Inclusion Index (Global Findex) database more than 1.3 billion women worldwide remain largely outside the formal financial system.

Only 26% of women in India admit to having a bank account. Per capita credit in the case of women is 80% lower than in the case of men.

Finance minister P Chidambaram has rightly pointed out the reasons for setting up a bank that predominantly serves women - from self-help groups to the small business women and from the working woman to the high net worth individual.

Access to banking services also has another major significance: prevention of financial frauds.

There have been increased incidences of firms operating between the regulatory boundaries at their will, defrauding investors in the name of emu farming, plantations, and pyramid formations and experts say that all such schemes fall under India's rapidly growing unregulated "shadow banking" area.

Seen in this light, the setting up of the Bharatiya Mahila Bank is more than a welcome step. More such initiatives are needed as the hard-earned money of too many innocent and financially uninitiated people is at stake.