India has made great strides in improving the well-being of the country’s citizens, with a large sum given by the ever-improving levels of financial inclusion, which has increased from 53% to 78% over the course of the last decade. However, significant gender gaps still exist, underscoring the need for women-specific policies and funding initiatives. These financial products can encourage more women to access formal credit channels and remove traditional financial barriers that hinder their progress.
In line with this year’s International Women’s Day theme “Investing in women: Accelerating progress”, let’s look at the benefits of such financial products and see how they can make it easier for women to achieve financial independence.
Promoting healthy financial habits with personalized credit and savings products
While the Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative has provided banking access to over 50 crore citizens since 2014, women have apparently benefited more with 56% of all Jan Dhan accounts belonging to them. However, there is a lot of headroom available for further improvement, especially considering India’s SDG of achieving 100% financial inclusion. To this end, it is essential to support the female population in accessing formal banking channels, both for their credit and savings needs. Consequently, most banks and financial institutions have introduced special savings accounts for women and the girl child, issuing additional benefits on savings and deposits. This instilled healthy financial habits that lead to positive education, health and employment outcomes. Similarly, recognizing the need for affordable and easy credit, a multitude of women-specific credit schemes and products are launched, often at lower credit costs to encourage formal credit. Securing long-term growth prospects with lower interest rates on loan offers
Many Indian women take job opportunities in the formal economy; with a growing tribe of women entrepreneurs contributing to India’s vibrant economy. However, more than 90% of these entrepreneurs are wary of using credit, drawing attention to the need to improve access to credit for women. Later, banks introduced a wide range of loan products for women borrowers, with reduced interest rates and higher loan amounts for women co-applicants. In addition, financial institutions are devising gender-responsive financial products and systems, and many provide tax support and even mentorship programs for budding women entrepreneurs. As a result of these measures, improved socio-economic outcomes are realized at the grassroots level.Protecting women against health and life risks with highly customizable insurance policies
With morbidity and health risks on the rise, the low insurance penetration among women in rural areas is a cause for concern, coming in at just 1% compared to the national average of 4%. To encourage women to improve insurance coverage, insurers are innovating specialized insurance products that can meet their unique requirements. These include life and health insurance products with built-in emergency cover and maternity benefits, enhancing protection against diseases such as cervical cancer, which endanger the lives of millions of women today. Similarly, the introduction of savings life insurance plans that combine the benefits of life insurance and non-market linked investment instruments in one cover facilitates more women in building a corpus for retirement planning.
With India’s female labor force participation rate growing to 37% in 2023, representing a 58% increase from levels seen in 2017-18, more women are expected to enter and contribute wholeheartedly to the formal Indian economy in the near term. Against this backdrop, eliminating existing gender gaps in finance and achieving women’s financial inclusion will require an all-out effort. To this end, supporting their growth with tailored financial products will be essential, potentially unlocking new opportunities for the country’s female population.
This article is written by Rajan Pental, Executive Director, YES BANK. All opinions expressed are personal.
ETBFSI now has its WhatsApp channel. Subscribe for all the latest updates.