PSBs can attract Rs 25000 cr in deposits by empowering 40 cr low-income Indians : Report

The report ‘The Power of Jan Dhan: Making Finance Work for Women in India’ has been made by global non-profit Women’s World Banking and Bank of Baroda.

It provides in-depth insights into the savings behaviour and financial inclusion barriers of women, and recommendations to PSBs and policymakers to successfully empower the account holders of Pradhan Mantri Jan Dhan Yojana (PMJDY), the government’s flagship financial inclusion scheme launched in 2014.

According to the Global Findex Report 2017, 77% of women and 83% of men in India own an account, and the gender gap between male and female account ownership has dropped to 6% (from 20% in 2014).

Today, 23.73 crore (237.3 million) women have Jan Dhan accounts. However, the report makes the distinction that having access to a bank account does not mean it is being used, which is a critical determinant of full financial inclusion.

Women’s World Banking and Bank of Baroda designed a pilot product specifically to encourage greater account usage among women Jan Dhan customers.

Jan Dhan Plus is a solution that combines a Jan Dhan account with an incentive to deposit Rs. 500 over four months. In return that account holder receives a Rs. 10,000 credit/overdraft facility.

This has several benefits – women account holders engage more with banks and build skills and trust, while the bank learns more about an important customer base and how to address it with products and services.

The women and their households not only develop a body of savings to support them in times of economic hardship, such as Covid-19, but they also have access to an overdraft facility, providing both an emergency fund, and a credit footprint for them to potentially access loans and other services in the future.

 The pilot was conducted with 101 Bank of Baroda branches across Mumbai, Delhi, and Chennai and over 300 Business Correspondent points between February 2020 to August 2020. During this period, nearly 50,000 men and women customers signed up for Jan Dhan Plus. 32% of women who visited the Business Correspondent points enrolled in the scheme within the first two months of the launch.

Amitabh Kant, CEO, NITI Aayog, Government of India noted in his keynote address at the launch of the report that women’s financial inclusion requires a more gender-inclusive financial system that addresses the specific demand and supply side barriers women face and leverages a partnership-led approach to address existing gaps.

"I invite more banks to engage women Jan Dhan customers and share their success. I also would like to invite organisations working in this area to collaborate with the Women Entrepreneurship Platform, a NITI Aayog initiative with the aim to overcome information asymmetry, showcase such initiatives and enable women to avail of their benefits,” he said.

Sriraman Jagannathan, Executive Vice President, Asia, Women’s World Banking, said, “Through Jan Dhan Plus, piloted with Bank of Baroda, we were able to study women’s savings behaviour and perceptions closely, which allowed us to design a product that caters to their unique needs.

"Our study underscored the need for sex-disaggregated data to design products for women that make them confident and comfortable in engaging with banks. We believe that if financial service providers adapted the features of Jan Dhan Plus at scale, it could become the product that transforms women’s savings habits."

The report’s key findings about women Jan Dhan customers

Why India’s PSBs must prioritise women savers

Women are loyal customers. Once women become familiar and comfortable with using a financial service, they tend to be more loyal customers of financial institutions than men.

Women are more active and committed savers than men. 70% of the women Jan Dhan customers surveyed save “small” amounts of money by curtailing their expenses.

Women can influence the saving habits of family members, as well as act as brand ambassadors in their communities.

Women have a favourable credit repayment behaviour.

Barriers that women face in saving formally

Women do not see banks as a familiar or trusted place to deposit their savings. Intimidated by negative experiences and often hard-to-understand banking terminology, leads women to save money via informal and familiar channels.

45% of women prefer to save spontaneously when the opportunity arises. As they do not consider banks to be amenable to depositing small amounts, they reserve bank deposits for larger transactions.

The need for instant access. Women do not find banks to be a viable option in saving money that they may want to access instantly for emergencies.

Awareness about the value of a local Business Correspondent is low to absent. Consequently, women who are not comfortable travelling a long distance to their local bank branch, choose to save informally.

 Women’s World Banking and Bank of Baroda’s Jan Dhan Plus solution, has inspired long-term savings behaviour in women via formal channels:

The robust potential for banks to redirect women’s small savings. Of the women that were educated about the small savings scheme, 50% expressed interest in depositing savings.

34% of the women visited the Business Correspondent channel as it was either conveniently located or were considered helpful and trustworthy. The Business Correspondent’s ability to engage efficiently with women is also reflected in higher cross sell penetration.

The Jan Dhan Plus appealed to women and proved relevant, resulting in 32% Business Correspondent walk-ins enrolling to start small savings. Despite COVID impacting the pilot, 18% of participants managed to save and completed four account deposits of Rs 500.

Women who started saving with Bank of Baroda have proved to be valuable, as they grew their balances 1.5 times compared to customers who did not enroll. Even women whose bank accounts were inactive for a year found the scheme to be relevant, changed their savings behaviour and grew their balances by over 90%.

Recommendations made by the report for Indian financial service providers and policymakers

Create relevant and simplified products for women by offering Jan Dhan Plus to mobilise savings, overdraft for loans, and launch (Unified Payment Interface) UPI-Receive only handle for ease of receiving payments into their Jan Dhan Accounts.

Promote awareness & nudge customers to save at the Business correspondent touch points. Explore low-cost mediums to reach women and build awareness using communication hooks specially designed for her, and nudges to trigger behaviour change.

Strengthen the Business Correspondents network to make them relationship managers who can help branches minimise low-value transactions and assist PSBs to engage the growing PMJDY segment.

Track data at a sex-disaggregated level and monitor portfolio data. Understanding the differences in women customer behaviour will help financial institutions and policy makers succeed in their efforts to advance financial inclusion.