Financial Literacy Among Rural Women: Foundation Of Economic Inclusion

It is a widely known and accepted fact that the financial inclusion of the rural population will create a positive ripple effect on development in India. According to RBI’s National Strategy for Financial Inclusion, financial inclusion has the potential to tackle income inequality, reduce poverty and, in turn, improve overall economic output at a national level.  

With the financial inclusion of rural women and their unique hurdles taken into account, this potential can also be realised on a personal level with women moving out of the often-exploitative informal sector into more productive activities, enabling themselves and their families with financial stability. 

The expanse between account ownership and usage:

There is still a considerable amount of work left to do to achieve inclusion, especially when it comes to rural women. Programs such as Pradhan Mantri Jan Dhan Yojana (PMJDY), the Central government’s flagship scheme to promote financial inclusion, have benefited about 55 per cent of women with basic bank accounts. According to Global Findex 2017, there has been a significant improvement in inclusion due to PMJDY, with the gender gap in account ownership reducing to 6 per cent in 2017 from 20 per cent in 2014.  

However, just owning bank accounts is not enough, rural women also need to use them.  And this is where the root of the problem lies – there is an expanse between bank account ownership and usage that needs to be crossed. The gender gap in the usage of bank accounts is still high as rural women lack financial literacy. 

Rural women tend to have minimal or no access to financial information and, coupled with lack of literacy, leaves them unable to engage with banking services, especially when they are online and digital. Physical banking spaces are often male-dominated, resulting in the women feeling intimidated. In such a scenario, the significance of financial and digital education for rural women becomes stark. 

Walking the distance to inclusion:

The financial gender gap in rural India can be addressed through dynamic financial literacy programmes that equip rural women with knowledge of cash management, savings, banking, insurance, investment tools, and other financial services. Such programmes would require a gendered approach as the reasons behind the financial exclusion of men and women differ vastly. For instance, as mentioned earlier, rural women hesitate to visit physical bank branches as they feel uncomfortable in the male-dominated environment, while this might not be the case for rural men. Hence, the financial literacy programmes also need to factor in the importance of digital literacy to enable women to conduct their basic banking activities remotely, on their mobile phones.

Imparting financial and digital literacy can also include training rural women as banking correspondents working with financial institutions and rural fintech. The benefits of this will be manifold. Rural women banking correspondents will gain the knowledge of performing and providing banking services (including digital banking). Other rural women will gain easy access to banking services and will no longer need to visit bank branches. In villages where the nearest bank branch or ATM is a long distance away, rural women won’t be restricted due to limited mobility as they will be able to access their hard-earned money through the banking correspondents’ micro-ATMs, allowing financial independence. Most importantly, the women banking correspondents will become self-reliant entrepreneurs helping their community and fellow women with essential services. 

Several organisations and fintech have implemented financial and digital literacy programmes and onboarded rural women banking correspondents. They all share the common findings of rural women becoming more aware of financial well-being and feeling confident in their ability to support their families through savings and microcredit. Women banking correspondents reach the unbanked areas, provide convenience and foster trust among rural women, become models of financial literacy for other rural women to follow, facilitate women entrepreneurship and further the mission of financial inclusion. 

Gender-focused approach: 

On October 15, United Nations’ International Day of Rural Women, it is important to recognize that women becoming a part of the banked population in the country is crucial. Any development without their participation will be incomplete and inequitable. The investment into the financial education of rural women needs to be gender-focused and address the societal factors that influence a rural woman’s life. 

An active and aggressive approach is required to address the gap in digital and financial literacy among rural women in India as it will form the foundation on which financial inclusion will stand.