The financial inclusion of women is set for a tech leap

Source: The post is based on the article “The financial inclusion of women is set for a tech leap” published in the Livemint on 3rd May 2023

Syllabus: GS 3 – Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Relevance: About the financial inclusion of women.

News: 56% of all these new bank accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY) are owned by women. This highlights the remarkable financial inclusion of women.

What are the findings of analysis of women’s bank accounts under PMJDY?

According to a report by Women’s World Banking, a) most women only access their PMJDY accounts to withdraw the benefit transfers that they receive in them from the various government initiatives that they are eligible for, b) most of them do not use these accounts for savings, to build a credit history, or avail of any financial products such as insurance and loans.

This highlights the need for women to actively engage in the formal financial industry.

Read more: About improving financial inclusion: Breaking barriers, building inclusion

What are the challenges faced by women while entering the formal financial industry?

-Most women tend to work and shop within a four-kilometre radius of their homes. This means the majority of the industries are beyond the reach of most women, particularly in the rural hinterland.

-Women tend to have concerns around privacy and confidentiality and as a result, they hesitate to discuss personal financial matters with strangers.

-Even though women tend to live longer, they have higher medical expenses. This renders traditional retirement planning poorly suited to the needs of the average woman.

Read more: Financial inclusion is integral to holistic development

What can be done to facilitate women’s participation in the formal financial industry?

Promote the use of digital payments among women: This will reduce physical and financial risks for women associated with travelling to the bank branch. Thereby, reducing the time and effort required to manage their finances. Further, they offer a level of privacy, confidentiality and a sense of control over women’s financial information.

Design dedicated services to address the needs of women: A private research has found that the women-specific financial services industry is worth roughly $700 billion. This represents roughly 5-20% of the total revenue of the industry. This amount far exceeds the annual revenue of most of the world’s leading financial institutions.

So, fintech firms and financial institutions need to make a concerted effort to address the challenges faced by women while using formal finances. They need to bring a gendered approach in each stage of the product delivery cycle to make sure that they are serving the genuine concerns around limited mobility and access to information.

Nurture the ecosystem of business correspondents in rural areas: To ensure women have digital and financial capabilities, India should nurture the ecosystem of business correspondents in rural areas. The correspondents should offer a broader range of services than just plain banking. Such as overdrafts for emergencies, micro-insurance, micro-pension and other similar products.

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