Financial inclusion

Overview of Financial Inclusion

Around the world, there has been great progress in financial inclusion. Between 2014 and 2017, the number of adults who owned an account at a financial institution increased by 515 million, and the percentage of adults who owned an account grew to 69 per cent from 62 per cent in 2014 and 51 per cent in 2011. According to the Global Findex 2017 database, account ownership is defined as having an individual or jointly owned account either at a financial institution or through a mobile money provider . An account at a financial institution can be an account at a bank and/or another type of financial institution, such as a credit union, cooperative, or microfinance institution. Mobile money providers offer accounts accessed via a mobile phone used to save, pay bills, or send or receive money.

Despite such benefits, over 1.7 billion adults still do not use formal financial services such as deposit and savings accounts, payment services, loans, and insurance. Most of the people who don’t have access to formal financial services live in the developing world, and women represent a disproportionate percentage of these people. In developing economies, 67 per cent of men reported having an account, compared to only 59 per cent of women, a gender gap of 8 percentage points. Although the size of the gender gap varies across developing economies e.g., Bangladesh, Pakistan has a gender gap of nearly 30 percentage points while India has a gender gap of 6 percentage points.


Financial inclusion


India has managed to outpace countries such as Bangladesh, Indonesia and Nigeria in the provision of formal financial services to women. In India, people owning accounts at financial institutions has more than doubled since 2011 and by 2017, it covered 80 per cent of the population. This is the outcome of Pradhan Mantri Jan Dhan Yojana (PMJDY) launched in 2014 to increase account ownership amongst unbanked adults through biometric identification cards. In between 2014 and 2017, account ownership for women also rose by more than 30 percentage points. Although, there still exists a gender gap in access to bank accounts by 6 percentage points and the use of digital payments by 13 percentage points. According to the National Family Health Survey-4, in 2015-16, 53 per cent of women have a bank or savings account that they use themselves. 

India’s Regulatory Support on Financial Inclusion

In recent years, the Government and Reserve Bank of India have made financial inclusion a national priority and have implemented policies and regulatory changes to support universal financial inclusion.

Basic Savings Accounts: To provide a bank account to every household, India’s national financial inclusion strategy, PMJDY, has reduced documentation requirements for people to access basic banking services such as credit, insurance, and pension facilities. This change also enabled people to receive government benefits directly into their accounts. Between 2014 and January 2021, the program has opened about 417 million accounts.

Biometric Identification: Without a formal identification (ID), many Indians struggled to open a bank account. In response, the government launched Aadhaar, the national biometric identification system that provides every Indian citizen with a unique identification number linked to their fingerprints and retinal scan. Aadhaar has the potential to accelerate the financial inclusion of low-income populations with no formal ID given its usage instead of paper documentation.

Payments Banks: In 2015, the Reserve Bank of India revolutionized cashless payment services by approving the creation of payments banks, which are branchless institutions that provide basic banking services through a combination of digital channels and a network of agents that extend bank services to communities and homes.

The “Less Cash” Economy: There has been an uptake in usage of instant payment systems, pre-paid instruments, such as Unified Payments Interface (UPI), mobile wallets like PayTM, GPay etc. In the last five years, over 100 million UPI Quick Responses (QRs) have been created and BHIM UPI has processed 22 billion transactions worth INR 41,000 billion in 2020-21 . This has helped to accelerate the uptake of mobile financial services in one of the world’s most cash-reliant economies.

These policies have been instrumental in also closing the gender digital divide and in creating a bridge for women’s financial inclusion through mobile phones.

Relevance of Mobile for Financial Inclusion for Women

While digital financial services are available in many forms—including ATMs, point-of-sale terminals, and debit cards—mobile financial services, the financial services offered through a mobile phone, deliver several benefits that could make adoption more widespread among women:

Financial inclusion


With over 1,175 million unique mobile subscribers, India is the second-largest mobile market in the world. If we look at the data on phone ownership, in 2015, 184 million Indians had a feature phone  which increased to around 500 million in 2018.

In terms of internet use and smartphones, over 320 million Indians have joined the global network of internet users since 2013, more than doubling the total national penetration rate. Ownership of smartphones has increased from 5.5 phones per 100 people in 2013 to 26.2 phones per hundred in 2018, with India adding more than 280 million smartphone users over that period. Note the above data encompasses both women and men.

Moreover, 45.9 per cent of women in India have a mobile phone that they use.

For all these reasons, we can expect financial services offered through mobile channels to become increasingly popular among women given its exponential rate of growth in terms of ownership and use.

Therefore, realizing the potential of mobile financial services, women will require training on its use, and tailor-made products and services to meet their needs. There’s also a need for the financial inclusion community and government initiatives to focus more on getting women to use their accounts. Hence, investments to build out the mobile ecosystem, by allowing women to use mobile financial services in their communities, will enable greater use of accounts and will help women “graduate” to more advanced financial services.

The Government of India has laid a strong foundation for ensuring digital financial inclusion for women with mobile by introducing the Jan Dhan-Aadhar-Mobile (JAM) trinity. This has linked citizen’s mobile phones with their unique identification i.e., Aadhaar and their bank account which provides an initial digital infrastructure not just for e-KYC but for an array of personalized digital financial products and services .

Drivers and Barriers of Mobile for Financial Inclusion for Women


  1. Time savings and convenience: Women shoulder most of the responsibility of unpaid work with family and at home working seven days a week. They usually prefer keeping cash for transactions and/or depend on any male member of the family to withdraw money from them from ATMs to avoid queues and save travel time. Between work and family obligations, women have very little free time. Some refer to this phenomenon as “time poverty,” and it is a real problem for women in India. Mobile financial services could reduce the challenge of time poverty by giving women the freedom to conduct financial transactions when and where it is convenient for them.
  2. Mobility: In India, women face mobility constraints because of their gender. Often men accompany women to go to a bank. Women members have concerns about safety during their travels and lack of permission from the male heads of their households to travel. This hinders access to banking and mobile financial services can solve the mobility barrier by allowing women to conduct transactions from their homes.
  3. High rates of access to a mobile phone: Perhaps one of the most significant factors to support women’s use of mobile financial services is the fact that nearly all Indian adults have access to a mobile phone, because they own one or because they borrow one from family and friends. The price differential between basic phones and smartphones has reduced dramatically in the last few years.


Despite these drivers, there are barriers to women’s use of mobile financial services, including gender norms, low levels of digital literacy, lack of awareness of these products and their benefits, and distrust of mobile financial services. Another major obstacle is the limitations of some mobile financial products on various devices, e.g., some products do not offer an interface for basic or feature phones, and some apps are unavailable in local languages. Finally, the small number of merchants that accept digital payments limits the incentives for women members to adopt these technologies, especially in rural and semi-rural regions.


Design customized products and services for women: Service providers should use a gender lens when designing new products. Financial service providers must engage with women directly to understand their needs, behaviours, and preferences and try to create value through products that will solve their pain points.

Invest in training, education, and awareness building: To increase usage among low-income adults, particularly women, the government should engage in a Public-Private Partnership (PPP) with service providers to invest further in education and awareness-building. Education efforts can also help women become more active smartphone users, opening greater market opportunities for mobile money providers. For effective learning, female salesforce and agents should be hired who can educate and support women in their use of mobile products. Mass and social media should address norms of individual financial participation to deliver broad, low-cost financial education.

Ensure privacy and security: To encourage women to use mobile financial services, the government and providers should ensure the availability of more female banking agent networks for better convenience and security. 

Invest in the customer experience: Build focus on developing women’s trust by offering products that are safe and reliable by avoiding service downtime, inadequate data protection, insufficient agent liquidity, and by ensuring terms and conditions are transparent. The key is excellent customer support because a negative experience can set mobile financial services providers back years in terms of customer acquisition.

Invest in research on women’s use of mobile financial services and the associated gender gap: Government, development agencies and experts can invest in research on the gender and social norms preventing Indian women from participating in the formal financial system fully. More information about how social norms affect attitudes and behaviours of women will help the financial inclusion community develop effective strategies, products, and services that account for these limitations.

Coordinate efforts across all stakeholders to drive a holistic approach to the financial inclusion of women: There should be coordinated efforts to align interests and approaches by buyers, suppliers, service providers, policymakers, and regulators. Doing so will help the financial inclusion community collaborate to ensure systems are established so more women use digital products and services actively. Coordination among all stakeholders could help governments deliver more benefits via digital transfers and could encourage more merchants to accept digital payments.

Recent Central Financial Institutional and Governmental Efforts

  1. National Strategy for Financial Education (NSFE) 2020-25: The NSFE has been developed by the National Centre for Financial Education (NCFE) in collaboration with key financial regulators in India i.e., Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority and other stakeholders to strengthen financial inclusion in India. Under this, they plan to create financial awareness amongst people who are newly inducted into the financial system, adults, farmers, school children, senior citizens, SHGs and entrepreneurs via the Financial Literacy Awareness Programmes (FLAPs). The programme will use Mobile Demo Vans fitted with audio-video equipment, ATMs, micro-ATMs to enable people to conduct digital transactions.
  2. Universal Access to Mobile Connectivity, Digital India: The initiative focuses on network penetration and filling the gaps in connectivity in India. It aims to expand mobile coverage to generate demand for mobile services in rural areas and attract private-sector telecoms and internet service providers.
  3. e-RUPI: The Government of India launched the digital payment solution e-RUPI, a cashless and contactless instrument for digital payment. It is expected to play a huge role in making Direct Benefit Transfer (DBT) more effective in digital transactions and to give a new dimension to digital governance. One of its advantages is that it is operable on basic phones also, and hence, it can be used by persons who do not own smartphones or in places that lack an internet connection.

There is a further requirement for tailoring mobile-based financial inclusion policies with a gender lens. Currently, women are under-served by financial institutions which perceive them as expensive customers whose transaction and deposit values are small. This could be explored further as an opportunity to develop products and services that are accessible and affordable to women to boost the financial sector of India.

This blog has been authored by Guriya.

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