The role of financial education in empowering women via inclusive finance

Empowering women through inclusive finance

Over the past decade, India has witnessed a significant surge in women’s participation in the financial mainstream. Digital financial services, such as mobile wallets and other tech-based solutions, have emerged as powerful drivers of this progress. The fintech industry has played a pivotal role by creating innovative products and features that are specifically designed to meet the needs of women, fostering their financial inclusion and economic empowerment.

These efforts align with India’s national mission to leverage financial inclusion as a key tool for achieving gender equality. Recognizing the critical link between eliminating social disparities and advancing women’s economic participation, India views financial inclusion as a cornerstone for its overall economic development.

No doubt, women’s financial inclusion ensures economic benefits while also propelling sustainable development for society at large. Globally, by keeping women at the centre of business strategies, banks and other financial service providers could unlock $700 billion in yearly revenues, just by offering women the same level of services that they provide men. What’s more, by balancing the financial scales, $1.7 trillion in fresh loans could be released to women-led ventures, in turn leading to $50 billion in new insurance premium revenues each year.

How India Leads the Way in Financial Inclusion

Fortunately, the Central Government had realised the significance of gender-linked financial inclusion. Therefore, it launched several digital public infrastructure (DPI) initiatives to ensure easy access to savings accounts and need-based loans for marginalised sections, particularly women. These include the Pradhan Mantri Jan Dhan Yojana (PMJDY), UPI and Aadhaar, among others. By promoting a seamless KYC (know your customer) process, Aadhaar has accelerated women’s financial inclusion.

It is estimated that India’s digital programmes have achieved development progress within less than a decade, which would otherwise have taken four decades. During the peak pandemic period, the nation’s DPI-driven systems disbursed financial benefits to women and other needy cohorts much faster than many developed countries did. Thanks to its DPI, India narrowed its gender gap by six percentage points to effectively zero between 2017 and 2021.

Not surprisingly, Women’s World Banking (WWB) used the country’s expanding DPI by working jointly with public sector banks across 21 states to provide a beneficial savings solution to more than 14.5 million female customers. Despite the progress made by India, however, the journey of women’s financial inclusion throughout the world has some way to go before it is termed a success story. WWB reveals that almost a billion women worldwide remain unserved or underserved by formal financial systems, due to which they cannot tap their entire economic potential.

By ensuring the equal participation of women, $12 trillion can be added annually to the global GDP by 2025. Thereby, financial services would drive both economic and inclusive growth. Financial inclusion is crucial in empowering women by providing them access to financial products and allied resources, including savings, credit, payment and insurance services.

Pan-India Impact of Institutional Schemes

Coming back to India, riding on the success of its earlier initiatives, the Union Government is making all-out efforts to further improve the financial empowerment of women by promoting greater financial literacy. Accordingly, numerous official schemes are underway that support women in overcoming societal and financial literacy challenges. For instance, there are self-help groups and development programmes such as the Financial Literacy and Credit Counselling Centres (FLCC) and the National Centre for Financial Education (NCFE), which seek to develop and disseminate financial literacy resources through relevant campaigns and projects.

Besides PMJDY, there is Beti Bachao, Beti Padhao, aimed at driving women’s empowerment by educating the girl-child. The Reserve Bank of India’s Centre for Financial Literacy (CFL) also offers basic finance education via audio-visual tools and interactive sessions aimed at both rural and urban segments. Among the above, PMJDY needs special mention since it has led to the opening of more than 460 million bank accounts. Of these, around 55% are owned by women. Also, as the Finance Minister mentioned in her Interim Budget speech, out of Rs444.6 million in loans given under PMJDY in 2023, Rs306.4 million (69%) were sanctioned to women.

The success of this single scheme has boosted the pan-India financial inclusion of women, allowing access to an array of financial services. Thanks to the real-time details regarding account ownership and usage, PMJDY has been instrumental in bridging the gender gap and enhancing the participation of women in various economic activities. Consequently, it’s playing a vital role in the Centre’s efforts to create a more inclusive and empowered society for women.

Finally, as India keeps breaking gender stereotypes, its sustained, long-term efforts to facilitate greater financial literacy among women are bound to ensure financial inclusion among all women’s groups across the country, sooner or later. Undoubtedly, financial literacy is a key tool in ensuring gender equality and women’s empowerment.