Goddess Durga is often proclaimed as “Shakti Rupena Samasthita” or the unassailable and formidable goddess who is in every being the supreme energy. In beauty and spirit, she is the quintessential Indian woman representing three icons of wealth, power and wisdom. Yet, even in the land which worships the goddess, there is a gross underrepresentation of women in financial matters. How can this gap be diminished? As we celebrate Navratri and Durga Puja this year, let’s understand the challenges to financial inclusion of women and work to better the situation.
The Global Exclusion:
A research by the International Monetary Fund (IMF) showed that inclusion of women in financial services as users, providers or regulators would facilitate in narrowing the gender gap, foster greater stability in the system and boost economic growth. On an average in 2015, less than 2 per cent of financial institutions across the globe had women chief executive officers and less than 20 per cent of the executive board panelists were women. The report said that only 40 per cent of women on an average accounted for the global bank depositors and borrowers in 2016. On the other hand, in 2018 nearly 75 per cent of businesses across the globe had at least one woman in the senior management.
The Indian Scenario:
As per the recently published Global Findex Survey, there was a sharp rise in the bank accounts held by Indian women from 43 per cent in 2014 to 77 per cent in 2017. This could be attributed to demonetisation and Jan Dhan Yojana, the government scheme of financial inclusion. However, the report also indicated that women are still trailing behind in accessing the financial system as only 17 per cent of women are regular depositors. Only 5 per cent borrowed formal loans, while 30 per cent availed informal loans from friends and family in 2017. On the other hand, nearly 11 per cent CEOs and 22 per cent banking sector employees in India are women, a good number compared to the global statistics. Considering other sectors, 20 per cent of senior roles in India were held by women, higher than 14 per cent and 17 per cent recorded in 2014 and 2017, respectively.
Why the exclusion exists?
One of the primary reasons for the lack of representation of women is that a majority of them across the globe do not have formal employment. According to the World Bank in 2017, an abysmal 26 per cent of Indian women were part of the workforce, as compared to the world average of 50 per cent. This is lower than the 35 per cent recorded in 2005. Another report by the IMF claims that India could become 27 per cent richer if more women started working outside the household. Growth in the number of working women would also enhance the chances of more women occupying leadership positions. The IMF research also suggests that bridging the gender gap in leadership can have a profound impact on the stability of the banks.
Apart from the historical impact of patriarchy, cultural stereotyping is a major demon acting against financial inclusion of women. Stereotyping of women needs to be addressed at different stages. For instance, the current strength of women in the lower house of the Indian Parliament is merely 12 per cent when a Bill demanding 33 per cent reservation of seats for women in the Lok Sabha is pending for nearly two decades.
How financial inclusion can help
A recent article by the United Nations Development Programme said women invest 50 per cent less than men but make 20 per cent more profits. Similarly, an IMF report affirms that women are better risk managers. The report claims banks with women leadership were more stable, had higher capital buffers, lower proportion of nonperforming loans, and greater resistance to stress.
The Way Ahead:
Empowering women economically drives social progress and to empower women, we first need to bridge the gender gap in the society. On the business front, comprehensive and actionable plans need to be devised to support and advance women, which further need to be regularly revised and updated with new insights. According to a report published by the World Bank, Indian companies are biased towards men in hiring and salaries. Overcoming such inhibitions would help to cover a large portion of the gender gap. So, as the skies reverberate with the sound of drums and songs in praise of the Goddess Durga, let us pledge this year to overcome this gap.
The author is the CEO of Karvy Stock Broking Limited