Does Opening a Bank Account Make Rural Women Financially Literate?

Financial inclusion, such as opening bank accounts and financial awareness, is considered as a development objective by policymakers recently. It becomes important for citizens to maintain a bank account for the effective implementation of government programmes such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and other direct benefit transfer schemes. 

Results have been showing up in terms of numbers. The percentage of adults who have a bank account was at 53% in 2014; it has drastically seen a rise to 80% in 2017. The programme, Pradhan Mantri Jan Dhan Yojana (PMJDY), initiated 36 crore bank accounts to open. Out of this, about 50% of accounts were opened by women. The gender gap in account ownership shrunk from 20% in 2016 to 6% currently.

Keeping all these facts and figures aside, one must focus on the usage statistics to understand the actual effectiveness of the programmes. In reality, a gap is seen in the number of accounts opened and those that are in constant usage.

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The demand-side efforts do not yet match the supply-side efforts and require better focus and investment. The statement is backed up by the state where half the opened accounts being inactive, especially of women account holders.

Lack of financial literacy is one of the major reasons for such a scenario. Women from rural areas are not aware of ways to update themselves in the financial space. It is agreeable that the digital/online banking has made its way to be a part of citizens’ daily life. The same is not true when it comes to the rural population. 

Literacy, mobility, public spaces, and online banking facilities are a few things they do not have easy access to. Getting along with the English-dominated internet space is something not affordable to them. Poor internet connectivity, socio-economic barriers, and financial behaviour can be a few other causes for the bank accounts being inactive.

As part of plans to improve financial literacy, Financial Literacy and Counseling Centres (FLCCs) are set up by leading banks in different districts. FLCCs are district-level entities that provide financial awareness using camp-based approach. The entity believes that financial inclusion for women is different from that of men.

Other programmes, such as SIDBI’s PSIF programme and the Financial Literacy and Women Empowerment (FLWE), detail how a gendered approach to financial education can have a multi-fold effect on sanitation, education, health, and lifestyle. The latter programme taught in states such as Uttar Pradesh, Bihar, Odisha, and Madhya Pradesh.

For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in