Promoting Women’s Financial Inclusion at Scale

Financial inclusion is fundamental to driving social inclusion, poverty alleviation, and economic growth in a nation. Financial inclusion refers to the accessibility of affordable financial products and services that cater to the requirements of individuals and businesses. These services encompass various financial aspects such as transactions, payments, savings, credit, and insurance, all of which should be provided in a responsible and sustainable manner. Building financial inclusion involves connecting people to these tools, or building these tools for people to access them in ways that work for them (World Bank).?

Why is Financial Inclusion important, especially in India?

India, with a significant rural population and a vast informal sector, has witnessed a remarkable transformation in its financial landscape in recent years. The introduction of Aadhaar cards and digital banking has brought banking services to previously unbanked individuals. 90% of the population has enrolled in a digital identification (ID) system. This substantial adoption of digital IDs has, in turn, facilitated increased accessibility to formal financial services. Specifically, half of this enrolled population can open bank accounts. This development has not only simplified the process of accessing bank accounts but has also streamlined the accessibility of loans and participation in various financial schemes, contributing to a more inclusive and accessible financial ecosystem (IMF, Stacking up financial inclusion gains in India, 2021).?

However, despite this progress, challenges persist, particularly in ensuring that marginalized communities and women have equitable access to these financial services. In this article, we will explore the unique context of financial inclusion in India and discuss strategies that organizations can employ to boost their efforts on a larger scale. Despite the high adoption of digital IDs and digital banking, nearly half of all bank accounts in India are inactive, meaning they never receive a deposit—the highest number of inactive accounts worldwide (Demirguc-Kunt and others, 2018).

Financial inclusion in India, therefore needs to be highly context-specific. They need to indoctrinate populations across the country into the Indian Digital Stack and formalize livelihoods and income-generating activities that are accessible to rural and marginalized populations.

In India, CSR has become an effective tool to support financial inclusion interventions among the poor and marginalized population. How can organizations boost their financial inclusion efforts at scale in a context-specific way?

A recently concluded needs assessment study by NuSocia gave us unique insights into key interventions or themes that could answer this question across multiple states and geographies. A prominent financial services provider wanted to design a program for financial inclusion in three distinctive regions of India: Bahraich (Uttar Pradesh), Baran (Rajasthan), and Virudhnagar (Tamil Nadu).

The program intends to align with the Aspirational District Programme (ADP) by Niti Aayog, with a focus on critical thematic areas encompassing Health and Nutrition, Education, Agriculture and Water Resources, Financial Inclusion, Skill Development, and Basic Infrastructure.

Virudhnagar, Tamil Nadu: Virudhnagar poses a unique set of geographical and cultural factors that shape the development landscape. A mix of industrial and agricultural areas, the area faces a significant issue of water scarcity. A further understanding of the local culture reveals a complex picture. Job opportunities for the youth are limited, as the presence of industrial jobs with fixed salaries often deters them from exploring diverse opportunities. Agriculture and livestock rearing face challenges due to low yields, and limited profit.

Women in Virudhnagar actively engage in income generation. However, participation in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) Self-Help Group (SHG) activities is a challenge because of time constraints.

Bahraich, Uttar Pradesh: The geographical and cultural contexts shift significantly in Bahraich. The district is blessed with fertile land but faces the threat of climate change and natural disasters, such as floods in various blocks. Multidimensional poverty, illiteracy, and the primarily agriculture-based economy pose several problems to financial inclusion.?

Empowering girls and women through education and livelihood opportunities is a key objective.?

Baran, Rajasthan: Home to the Sehariya tribe, the region has a rich cultural tapestry. Agriculture forms the backbone of the economy, with substantial scope for promoting organic and multilayer farming. However, the community grapples with a lack of skills and entrepreneurial capabilities, frequent power cuts, low literacy rates, and gender discrimination.

Despite the geographical, cultural, and economic diversities in these regions, common themes of income generation and financial inclusion emerge -?

1. Women as Engines of Income Generation: Across these diverse regions, women are actively engaged in income generation. Whether it's through traditional crafts, agricultural activities, or entrepreneurial ventures, women are emerging as the driving force behind income generation, bolstering their economic independence and the financial stability of their families and communities.

2. The Power of Self-Help Groups (SHGs): In all three regions, SHGs have not functioned to their potential. SHG groups have traditionally played an important microfinance system for women acting as a bridge between women entrepreneurs who have the will to begin an enterprise but do not have the resources to fulfill their dream, and the finances needed for it.

In all three scenarios, the lack of trust and transparency amongst women, the lack of adequate marketing of products by the SHGs in potential markets, and the inability to pay back loans because of daily wage work have hindered women from utilizing the potential of the SHGs. However, they do play a pivotal role in income generation. These community-based organizations empower individuals, particularly women, to pool their resources, access financial services, and engage in various income-generating activities, fostering financial inclusion at the grassroots level.

3. Local Entrepreneurship: Each region showcases skills and livelihood opportunities through local entrepreneurship. However, the dependency on daily wages, especially for women, leads them away from entrepreneurial livelihood options because accessing capital is one of the largest barriers women face in becoming local barriers.?

Whether it's through rural-based social enterprise programs, artisanal skills, or agribusiness initiatives, communities can tap into their unique strengths and resources, boosting income and promoting self-reliance.?

Fostering Financial Inclusion of Women in India

These observations bring forth three key interventions that organizations can explore to boost financial inclusion, especially for marginalized women in India.

1. Empowering Financial Literacy: Recognizing that knowledge is the key to financial inclusion, programs should aim to equip individuals with the skills and understanding necessary to make informed financial decisions, placing financial literacy at the forefront of inclusive economic growth.

2. Encouraging Participation in Formal Financial Systems: Another common thread is encouraging participation in formal financial systems. Access to savings accounts, credit facilities, and insurance services empowers individuals to manage financial risks, invest in income-generating activities, and secure their economic future, bridging the gap between communities and formal financial institutions.

Strengthening the role of SHGs in inclusive financial development at the grassroots level can encourage and build a community of women who trust, support, and take responsibility together in addition to connecting women to India’s digital banking, loans, and schemes.?

3. Promoting Collaborative Learning: Communities should be encouraged to share their knowledge and experiences, learn from one another, and adapt successful practices to their specific contexts, accelerating financial inclusion and fostering collective empowerment.

Whether it's empowering women, supporting the growth of local enterprises, or promoting financial literacy, the roadmap to inclusive economic growth may vary, but the destination remains the same: a more financially inclusive future for all.