Women are known to be better savers than men, despite the fact their incomes are lower and many women do not have access to paid work. Given their roles in households, women tend to save a higher proportion for the welfare of their families, which leads to direct improvements in health, education, and employment.
A recent report by the Reserve Bank of India, “Deposits with Scheduled Commercial Banks – March 2023”, corroborates that women in India are saving more as deposits in bank accounts owned by women increased from 19.8 percent last year to 20.5 percent in 2023. As the report reflects a decline in the overall share of individuals in total deposits during the year, the increase in women’s share tells its own story.
The report shows per capita deposits by women increased by Rs 4,618 in the period between 2019 and 2023. States like Karnataka and Kerala which have higher participation of women in the workforce had the highest per capita deposits by women while states like Odisha and Madhya Pradesh lagged behind.
Role Of Policies
The increase in the share of bank deposits by women has been enabled by specific policy interventions like the financial inclusion drive under Pradhan Mantri Jan Dhan Yojana (PMJDY) which has helped women obtain basic bank accounts and integrated these accounts with unique identity (Aadhaar) and mobile technology. This JAM trinity has accelerated financial inclusion in the country by four decades. Nearly 55 percent of accounts under PMJDY are held by women which has helped India close the gender gap in access to bank accounts.
The increase can also be linked to the impact of the Direct Benefit Transfer (DBT) programme, which has been scaled up since the pandemic and covers nearly all welfare schemes in India. Under the programme, cash transfers are made by the government directly into bank accounts of citizens. It has driven up the financial inclusion of women in India — there is evidence when beneficiaries receive payments from the government they are likely to save more and to borrow money as well.
One of the schemes covered under DBT is the rural employment guarantee programme. Women constitute more than 50 percent of the workforce under MGNREGA and the wages are transferred directly into their bank accounts. This has contributed to the increase in bank deposits of women according to research by the State Bank of India on the RBI data.
Untapped Banking Potential
Data by RBI also shows an increase in women’s share in credit to individuals, which rose from 21.1 percent in 2019 to 22.9 percent in 2023. There has been some progress in addressing the financing gaps faced by women entrepreneurs, by prioritising lending to women through initiatives like the Pradhan Mantri MUDRA Yojana, which promotes inclusion of women through collateral-free micro-loans.
If female entrepreneurship could be accelerated in the country, it could create 150–170 million jobs until 2030. For that, women need access to credit that is not just limited to microfinance.
Women are a crucial and untapped consumer segment for banks. A report by Women’s World Banking, a global network of microfinance institutions, showed how women Jan Dhan customers are more profitable than men, as women are committed savers. A female Jan Dhan customer’s lifetime revenue is at least 12 percent higher than that of a male.
According to the report, by enabling 100 million low-income women to adopt small-scale savings, 400 million low-income people in their households can be reached. Banks can potentially unlock an estimated inflow of Rs. 25,000 crores (250 billion) in deposits, while disbursing in the region of Rs. 10,000 crore (100 billion) in Overdrafts to 20 million beneficiaries.
Barriers, Opportunities
There are barriers that need to be addressed. One in every five women in India still lacks access to a bank account and there are gender gaps in the usage of bank accounts. According to the Global Findex Database 2021 by the World Bank, 32 percent of women-owned bank accounts in India are inactive or dormant, the highest for any country.
Less than one-fifth of women who have a bank account save formally with the bank as they tend to save in informal systems such as community-based savings groups. For many women, usage of bank accounts is limited to withdrawal for emergencies, withdrawing salary, or availing government benefits.
It is not enough for women to have bank accounts, more women need access to essential financial services like savings, credit and insurance. There is a window of opportunity here, by promoting awareness and behavioural changes among women and ensuring financial services have a gender lens and cater to the specific needs of women, their access can be expanded. This in turn could lead to significant macroeconomic gains for the country and help women build economic resilience.
Sunaina Kumar is a Senior Fellow at the Observer Research Foundation and Executive Director at Think20 India Secretariat. She works on gender and development. Views are personal, and do not represent the stand of this publication
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