How financially savvy women can help increasing financial inclusion
46-year-old Sumitra Devi is employed as a domestic worker at an upscale residential complex in Patna. Kumari is a widow and lives alone – her children have moved to different parts of the country in search of work. When the first wave of the coronavirus pandemic hit the country and the government imposed a stringent lockdown to curb the infection, Devi found herself in a fix.
“I earn my living by working as a household help in three houses. At the end of every month, my employers pay me cash and that is what I rely on to sustain myself. A few days after the lockdown was imposed, I was in dire need of cash. I did not have a bank account then and whatever little savings I had was also in the form of cash. Thankfully, all my employers arranged ample cash for me – in fact they gave me extra money so that I could manage till the lockdown restrictions were eased,” she reminisces.
Once Devi was able to go back to work, one of her employers took the onus of opening a bank account for her and teaching her the basics of banking. “My employer is a lady who works at a bank and she was kind enough to take me with her to the bank and get an account opened. There have been times when I have thought of opening a bank account but going to the bank and fulfilling all the formalities seemed a very daunting task. Had it not been for my employer, I would have continued to be dependent on cash and now that I am capable of using basic banking services, life has become simpler.”
While Devi knows how to read and write, she acknowledges that she could never muster the courage to actually step into a bank. Now under her employer’s guidance, Devi is learning the concepts of saving and investing. “I am learning to use net banking and payment apps. The experience has been nothing short of eye opening. The knowledge that you can manage your money with so much ease without having to worry about cash being stolen or lost is liberating. I have also started teaching my sisters who live close by whatever I am learning and they are already in the process of opening their bank accounts.”
In India, women’s engagement with financial institutions is eons away from being at par with that of men. While there have been some positive developments recently especially with the Pradhan Mantri Jan Dhan Yojana, unserved and underserved women still have a long way to go in terms of building financial resilience. A survey conducted in 2019 by the All India Debt and Investment Survey (AIDIS) administered by the National Statistical Office showed that 80.7% of women in rural areas and 81% in urban areas had deposit accounts in banks. The 2017 Global FINDEX also shows that the gender gap in account ownership has reduced from 20% in 2014 to 6% in 2017 – resulting in 77% of women with bank accounts, however 48% of these accounts owned by women are inactive.
It is common for women, especially those from backward communities, to not be able to have any say in households or in decisions pertaining to them or their families because of the lopsided power dynamics arising out of the control of the male members over the family’s financial resources. Financial inclusivity can afford women decision-making privileges and help them wrest undue control from their spouses, fathers, brothers or other male relatives. Devi’s case can be seen as an example of how financially savvy women can catalyse the movement of the financial inclusion of less privileged women in India.
There is ample research to indicate that the financial inclusion scenario for women is better in urban India than in rural areas. In urban areas, more and more women are learning the ropes of financial management without any assistance from the men folk. Higher literacy rates, better network connectivity and access to financial service providers, autonomy over the use of cellphones and the familiarity with using digital tools for financial tasks have made it possible for a larger number of urban women to become adept at managing their money. Hence such women can play a pivotal role in empowering other women, especially those from less privileged backgrounds with respect to financial inclusion. Their participation can be a game changer because women from rural areas and low-income backgrounds often hesitate to visit the bank or ATM or access any financial service provider physically because of restrictions on their mobility and the hesitation they may feel in dealing with the male staff and with female staff lacking in such spaces. Hence, a mentorship exercise led by women who are financially aware can help less privileged women in taking an active interest in taking steps towards becoming financially inclusive.
Preeti Zende, the founder of Apna Dhan Financial Services opines, “It has been observed that we share our finance and investment-related knowledge in the form of quick tips with our friends, relatives, neighbours. But frankly, it is the duty of all modern educated women to help unprivileged women who may be working as our domestic helpers, cooks, babysitters in managing their finances. Women from these spectra are the most volatile in terms of earning and saving. Sometimes they are the sole breadwinners as the husbands may be spending money on alcohol and need to take the responsibility of providing for at least 6 to 8 people.”
Zende, who has taken an active interest in ensuring her domestic helper’s finances are in order, suggests the process need not be an exhaustive one and a few simple steps can go a long way. “I have checked whether she has a Pradhan Mantri Jandhan account - I transfer half of her salary in her account and pay the other half in cash for her monthly expenses. I have asked her to subscribe to the Atal Pension Yojana through her Jandhan Account. I have explained to her that she is automatically entitled to get a life insurance cover of Rs. 30,000/- under Pradhan Mantri Jan DhanYojana, along with accidental Insurance cover of ₹1 lac and what’s more, she has learnt to use the RuPay debit card. I have also made sure that she and her family members are getting enrolled in the Ayushman Bharat scheme so that it will take care of her medical expenses. Thus a basic framework like this can be laid down and it can go a long way in improving the financial condition of these women.”
1. If you are looking at helping a less privileged woman, make sure to teach her the basic tenets of investing after you are done familiarizing her with the basics of using financial services.
2. Modern educated women to help unprivileged women who may be working as our domestic helpers, cooks, babysitters in managing their finances. Women from these spectra are the most volatile in terms of earning and saving.
3. You can also start an SIP with a nominal amount on the behalf of such women (provided they are comfortable with it). Mutual fund investments are easy, provide flexibility and can be a great stepping stone into the world of investing.
This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.