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The financial inclusion of women

GS Paper 2

 Syllabus: Welfare Schemes for Vulnerable Sections


Source: LM

 Context: It is challenging to achieve financial inclusion (FI) for women until they actively participate in the formal financial industry.


What is FI?

The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost. (RBI)


Why do women need FI?

  • FI is considered a critical indicator of development and is identified as an enabler for at least eight of the 17 SDGs.
  • For women, access to bank accounts, loans, insurance, and other financial services, results in direct improvements in outcomes of health, education, employment → economic independence → empowerment.
  • In turn, such progress helps achieve the collective goals of eradicating poverty, promoting inclusive growth, and reducing inequality.


The scheme promoting FI in India:

The Pradhan Mantri Jan Dhan Yojana (PMJDY):

  • 56% of all these new accounts are owned by women, which implies remarkable FI that has significantly reduced the gender gap, from 17% in 2011 to 6% in 2017.


Direct Benefits Transfer (DBT):

  • Since its inception in 2013, the Indian government has cumulatively transferred 16.8 trillion to beneficiaries through DBT. This has led to the FI of women, as they constitute a good number of beneficiaries under the schemes.



  • Women still lack participation in the formal financial industry. For example,
    • Most women only access their PMJDY accounts to withdraw the benefit transfers from the various government initiatives.
    • 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.
  • Inaccessibility: Most financial services are beyond the reach of most women, particularly in the rural hinterland.
  • Concerns around privacy and confidentiality: Hesitation to discuss personal financial matters with strangers.
  • The lack of collateral due to limited access to assets and property impedes their ability to avail of loans.
  • They have less influence over the family’s important financial choices → leading to wastages or use of benefits for non-essential purposes.


How to address these concerns?

  • Promote women’s access to and literacy in digital tools.
  • Promote the use of digital payments among women.
  • Appoint more women Business Correspondents (BCs).
  • Deepen convergence with self-help groups.
  • Collect gender-disaggregated data and develop strategies to form women-centric approaches.
  • Promote digital credit for medium and small businesses.


Some best practices:

  • The Bank Sakhis programme by the National Rural Livelihoods Mission trains SHG members to work as BCs in rural districts.
  • The PM Mudra Yojana targets the financial inclusion of women by providing collateral-free loans up to Rs. 1 million for small and micro enterprises.


Way ahead: Digital payment solutions can be easily redesigned to enable access to information that are key stumbling blocks to the FI of women.


Insta Links:

Women and financial inclusion


Prelims Links: UPSC 2016

The establishment of ‘Payment Banks’ is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?

  1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
  2. Payment Banks can issue both credit cards and debit cards.
  3. Payment Banks cannot undertake lending activities.

Select the correct answer using the code given below.

  1. 1 and 2 only
  2. 1 and 3 only
  3. 2 only
  4. 1, 2 and 3


Ans: 2