Improving financial equity for women in India is essential to achieving economic growth and ending poverty by 2030. Despite significant progress in increasing financial inclusion for the Indian population, women entrepreneurs face several challenges, including low engagement, lack of credit access, low representation, and the gender pay gap.
In this article, we will explore the challenges and solutions for women’s financial equity in India, the importance of financial literacy, and examples of women making strides in India.
Challenges for Women’s Financial Equity in India
- Low Engagement: Financial institutions measure risk and assign credit based on an applicant’s transaction account history. However, account inactivity is high in India, resulting in fewer women having a meaningful account history with which to measure risk.
- Lack of Credit Access: Less than 10% of India’s 1.3 million business correspondents are women, limiting the access options for women borrowers. Moreover, women receive credit equivalent to only 27% of the deposits they contribute, while men receive credit equal to 52% of their deposits.
- Low Representation: India needs more women in senior decision-making positions driving gender-responsive financial products and systems. This would ensure that women’s voices are heard and that the financial products offered cater to their needs.
- Gender Pay Gap: Women’s lack of access to education, job opportunities, and loans has led to a significant pay and wealth gap: Women earn less and are therefore less likely to accumulate wealth. According to studies, at the current rate of progress, it will take 132 years to reach full parity when it comes to equal pay.
Solutions for Women’s Financial Equity in India
Improving financial equity for women in India requires a collective effort from policymakers, industry leaders, cultural figures, and grassroots movements. Here are some solutions that can help:
- Increase Financial Usage: Increasing financial usage overall could be a first step toward improving credit access. However, women also face several systemic issues that limit their access to credit.
- Improve Representation: India needs more women in senior decision-making positions driving gender-responsive financial products and systems.
- Access to Non-Financial Business Services: Women’s access to non-financial business services, such as business coaching and tax-filing support, can improve their effectiveness as business owners, making them more ready and able to use credit to grow their businesses.
- Mobile Banking and Micro-financing: In developing countries, mobile banking has attempted to level the playing field by making banking more accessible, especially in countries with poor banking penetration. Micro-financing institutions have also further improved access to financial services, particularly for women.
Importance of Financial Literacy for Women in India
Financial literacy is crucial for women’s financial empowerment in India. According to the Humanity Welfare Council, 80% of women in India struggle with financial literacy, and around 62% of Indian women do not own bank accounts or have limited access to banking services.
Financial literacy can:
- Enable women to make independent decisions
- Help women deal with rising expenses and inflation
- Motivate children to stay money-wise
- Help women manage day-to-day expenses of the household
- Provide support for women even after the male member’s demise
Examples of Women Making Strides in India
India has made progress in empowering women through the efforts of organizations such as SEWA, Snehalaya, NEN, Azad Foundation, and MAKAAM.
> SEWA, a trade union established in 1972, aims to organize self-employed female workers so that they can attain full employment and access to benefits such as social security.
> Snehalaya, an NGO founded in 1989, provides support to vulnerable groups such as women, children, and the LGBT community.
> NEN, a women’s rights organization founded in 1995, focuses on human rights and gender justice and fights against gender-based discrimination. The
> Azad Foundation, established in 2008, provides training to resource-poor women to become professional drivers, while MAKAAM is a forum for female farmers’ rights that operates in 24 states in India.
These organizations have made significant strides in empowering women in India, providing important support to all types of women in need all across the country.
These examples demonstrate the progress being made towards improving financial equity for women in India, but there is still a long way to go. Here are some additional steps that can be taken to further improve financial equity for women in India:
Promote Financial Education: Financial education should be a priority for policymakers and financial institutions to ensure women have the knowledge and tools they need to make informed financial decisions.
Address Unconscious Bias: Financial institutions should work to address unconscious bias in their lending practices, which may disproportionately affect women and other marginalized groups.
Increase Women’s Representation in Financial Institutions: More women should be hired and promoted into leadership roles within financial institutions to ensure that the needs of women are being heard and addressed.
Encourage Female Entrepreneurship: Governments, NGOs, and financial institutions should work together to encourage and support female entrepreneurship through access to funding, mentorship, and other resources.
Lifting up all women
Improving financial equity for women in India is not only a moral imperative but also an economic one. Women’s financial empowerment can contribute significantly to India’s economic growth and help lift millions out of poverty. While there have been some positive developments in recent years, there is still much work to be done. By increasing financial usage, improving representation, providing access to non-financial business services, and promoting financial education, we can create a more equitable financial system that benefits everyone in India.
