New Delhi: Women in India are at the forefront of various fields, right from education, politics, and business to sports and entertainment. They are continuing to break the barriers of societal norms and stereotypes, and their contributions are critical to the growth and development of the country. However, despite the significant progress made, there is still a gap in financial equity - an aspect essential to achieving gender equality.
While India has made significant strides in bridging the gender gap in account ownership, with 77 per cent of women having access to financial institutions, there remains a disparity in the actual utilisation of financial services, as evidenced by the 42 per cent of women who hold inactive accounts. The truth is that women continue to face unique challenges in utilising financial products and services.
In this context, understanding women's financial needs and preferences becomes imperative to achieve financial equity in India. Let us delve into the underlying factors impeding financial equity for women and explore ways to overcome them.
Understanding Existing Disparities: Unique Financial Challenges Faced by Women
According to Wheebox India Skills Report 2023, India's employable workforce has increased from 46.2 per cent to 50.3 per cent, of which women represent 52.8 per cent. Although several women have made their way into the workforce, they tend to face unique financial pressures. For instance, the pay disparity that prevails across sectors has been a matter of concern for quite some time now. According to a report by the International Labour Organization (ILO), the gender pay gap in India stands at 27 per cent as of 2023, implying that women earn 73 per cent of what men earn for doing the same job.
Then there is the issue of longevity risk. In recent times, when women drop out mid-career to take on family responsibilities or become at-home caregivers for loved ones, it can create additional financial challenges when it comes to their retirement planning. Hence, it is important to recognise that women's financial behaviour is influenced by various societal and cultural factors, including gender norms, education levels, and access to information.
Achieving gender equality requires a comprehensive effort that addresses not only the structural and institutional barriers that women face but also factors that influence their behaviour and decision-making. Here, the financial services industry is poised to play an imperative role in driving gender equality.
Breaking Barriers: Strategies to Drive Gender Equality
The financial services industry can be both a catalyst and barometer of fostering and measuring gender equality. The journey from an opportunity to equity begins with empowering women with a steady source of income. Here, the financial services industry can play a pivotal role by promoting women's participation in the workforce and offering them access to financial products that they need and value.
This is followed by improving access and reach to financial planning tools and services. There is a need to establish regulatory frameworks that encourage the development of appropriate financial products, such as basic bank accounts and microinsurance, that address the needs of the underserved women segment. To improve reach, expanding the agent base of banking and insurance and implementing other cost-effective delivery channels becomes imperative.
The third step is to build more inclusive and accessible financial products and services for women. For instance, the self-employed women segment has unique financial requirements since, unlike traditional employees, they do not have access to employment-sponsored insurance and retirement benefits and are susceptible to an unsteady income stream.
At the same time, one cannot afford to ignore a woman's contribution as a homemaker. Their contributions have a significant economic value that would be difficult to replace. Catering to the largely underrepresented homemaker segment is a critical step towards empowering them and enabling greater financial inclusion. The fourth step is to address the gender gap in financial awareness. Information asymmetries are often obstacles not just for the underserved, but even for the privileged women in accessing financial services. A multi-pronged approach that involves educational institutions, financial stakeholders, and policymakers working together is pertinent to fulfil this goal.
The last step is to focus on enhancing infrastructure. While the government plays a critical role in strengthening the financial infrastructure and reach of products, private players across the spectrum of financial services should make a concerted effort to reach women audiences and enable a strong connection with them.
Empowering Women through Financial Equity: A Catalyst for Societal Growth
Financial equity is the precursor of building an equal world for women. By improving financial literacy and access to information, we can help women make better-informed decisions and achieve greater financial security. Bridging the gap between women and financial services will bode well from the point of view of embracing equality and benefitting women, along with society and the country's economy.
(Shailesh Singh, Senior Director and Chief People Officer, Max Life Insurance)