The work on inclusive finance in South Asia, particularly in India has been women led, breaking multiple belief systems to create a playing field where women were getting a small but impactful voice in the household. The self-help group (SHG) movement in India broke several extant stereotypes by changing the centrality of transactions  (Sriram, 2017). This is more impactful and important than the much-celebrated Grameen movement of Bangladesh.

The pump priming of a typical SHG happens through getting a set of women together to save. Once the savings reach a certain level and some rounds of savings and intra-lending is done, the groups link to the banks and (hopefully) get access to the mainstream banking system. The importance of savings first should not be lost in the discourse where the widespread belief is that the poor and vulnerable are unable to save. Ability to save or transact is not a function of poverty, it is a function of cash flows, where even the poor women would have access to some additional cash flows that they can put away in a safe and accessible place. The SHGs provided that important outlet.

Unlike the Latin American and the Far East Asian models of inclusive finance, the South Asian model of inclusive finance has been women led. Both the SHG movement in India and the Grameen (and its clones) movement in Bangladesh and India have been women centric. By putting women at the center, a gender stereotype that it is the man who is the breadwinner of the family was broken. By providing a women cash in her hand and the discretion on how the use that cash provided the agency for the women. The debate on whether a woman used the financial resources to undertake a livelihood activity on her own, or if she was just a passthrough for the man to ultimately use it is moot. The first step in the process is a conversation between the two heads of the family on how to use the resource. It is not about man versus woman or husband versus wife. It is more about meaningful conversations in the family on a somewhat equal footing.

The other stereotypes that the inclusive finance models broke was (a) moving from an asset centric collateral to a social collateral – which also favored women who might not have access to property or other collaterals; (b) undertaking transactions in places proximate to households, in the open, making the physical space more friendly, intimate and accessible; (c) by structuring regular transactions on a weekly/fortnightly frequency it helped the women to get out of their homes on a regular basis, with a purpose (Sriram, 2017). As we can see from the above instances, the fact that the model was women centric designed itself differently from traditional initiatives of inclusive finance. 

There is no clear evidence that the intervention in the inclusive finance space has led to reduction of poverty or empowerment (Banerjee, Duflo, Glennerster, & Kinnan., 2015). However there have been studies that indicate impacts on women empowerment (Burra, Deshmukh-Ranadive, & Murthy, 2005). The overall body of literature does not seem to have an overwhelmingly convincing answer for this.

Obviously, one is looking for a pattern in a complex web of financial and social relationships with one intervention that may be materially insignificant. The loan sizes given by inclusive finance institutions in the initial rounds are not significant enough to change the fundamentals of the livelihoods of the households. Given that it is women centric, there is a bias towards the stereotyping of what women could handle – a backyard animal husbandry unit, a home-based food processing unit, a small vending unit. It is only after multiple rounds of loaning and demonstration of enterprise that a small number of women get a larger enterprise loan that may show economic impacts on the family.

However, there is no denying the fact that slowly the negotiations change. One, the vulnerability of the women reduces because there is regular cash moving through her hand. She has agency on her cash flows to an extent. It gives her some negotiating power on how the household economy could be organized. Moreover, the women if they were largely homebound start interacting with the outer world. In the states of Andhra Pradesh and Telangana, the women leaders of SHGs routinely shake hands with officers and visitors to the groups. While shaking hands could be seen as a small and insignificant act, it is a giant step in a society where talking to strangers who are men could be a taboo. In a caste ridden society where untouchability is a reality, breaking that barrier is indeed a symbolic unshackling! The women negotiate with the bankers and talk the language of finance. While the journey may be long, the road towards the destination seems to be appropriate.

Digital Intervention and its implications

As the journey is progressing, there is a question whether there could be a set back in this journey. This comes through the digital divide. With the progress of technology and transactions moving to digital modes, particularly the mobile based Unified Payments Interface (UPI) powered by large tech giants like Google, WhatsApp, Paytm and PhonePe we need to interrogate what it is doing to the gender balance that the intervention of inclusive finance was attempting to achieve. Usually when the family has a collectively used asset – like furniture, clocks, household equipment and even the traditional landline telephone, the entire family usually has equal access to the asset. However, when the asset becomes personal and individually used – like a watch, a pen, a mobile phone then others getting access to the asset is to be negotiated.

With the State wanting to put most of the transactions on what is called as the JAM – Jandhan – Aadhaar – Mobile trinity, and increasing digitization of transactions including direct benefit transfers, one part of the trinity seems to be resting in the hands of the man. The woman might have a bank account, she might be negotiating a loan with the groups in SHG or Microfinance Institutions, would have an Aadhaar identification, but most likely would not have access to a mobile phone – a smartphone that accesses the net with adequate prepaid data, or a post-paid plan. Given that a smart mobile phone is an expensive device, the ownership tilts towards the man, and usually the household is likely to have only one mobile connection. This means that the woman who had gained agency is gradually losing the agency. The account in the name of the woman is mapped to the man, the messages of transactions go on that device and even the payments received would be in the device. Suddenly, the mobile phone becomes like cash – something fungible and could be used as long as one has access to the device and the passwords. The identity of the woman, her signature or thumbprint, the physical access to currency notes is all shifted to the man. While the transactions still happen through women, the routing necessarily happens through the agency of the man. This is a setback to the gender angle of the inclusive finance journey.

The issue of the digital divide and its implication on the agency of the woman is to be interrogated carefully and we need to ensure that the objective of inclusive finance – of reaching women through their livelihoods is achieved and not intermediated by men. This is an area that possibly needs attention.  

References

Banerjee, A., Duflo, E., Glennerster, R., & Kinnan., C. (2015). The Miracle of Microfinance? Evidence from a Randomized Evaluation. American Economic Journal: Applied Economics, 7(1), 22-53. doi:24 July 2024

Burra, N., Deshmukh-Ranadive, J., & Murthy, R. K. (2005). Microcredit, Poverty and Empowerment: Linking the Triad. New Delhi: Sage.

Sriram, M. (2017). Talking Financial Inclusion in Liberalised India: Conversations with Governors of the Reserve Bank of India. New Delhi: Routledge.