Using insight-driven proofs-of-concept, Women’s World Banking shows the commercial viability and the social impact a solution can have:
Women’s World Banking (WWB) is a global nonprofit devoted to giving low-income women in the developing world access to the financial tools and resources they require to achieve security and prosperity. Leading this global team based in New York is Mary Ellen Iskenderian, President & CEO of WWB, who also serves as a member of the Investment Committee of its two impact investment funds. She was in Mumbai recently for the ‘Making Finance Work for Women 2023 Global Summit’. Mary Ellen, along with Kalpana Ajayan, Regional Head, South Asia, Women’s World Banking, provide interesting insights into their financial inclusion work across the globe and specifically in India.
Mehul Dani: Why does Women’s World Banking champion the cause of women’s financial inclusion globally?
Mary Ellen Iskenderian: Financial inclusion refers to the accessibility of affordable financial products and services, including transactions, payments, savings, credit, insurance, and digital financial tools for people and businesses. When women are economically empowered, they can transform their circumstances. They gain status within their communities, escape from abuse, and invest in their families, leading to improved nutrition and education. This creates a ripple effect of intergenerational impact.
How is WWB promoting financial inclusion in India?
Mary: Women’s World Banking collaborates with financial service providers to demonstrate the benefits of investing in women as customers and leaders, thereby facilitating women’s financial inclusion. We work with regulators, financial service providers (FSPs), fintech companies, and others to help them understand women’s needs throughout their business life cycle, considering their challenges and aspirations. By adopting a women-centered design approach, we assist stakeholders in designing solutions that cater to women. Using insight-driven proofs-of-concept, we showcase the commercial viability and social impact of these solutions. We then present these insights to relevant forums, demonstrating the potential of women customers and the economic returns they can bring.
Who are your institutional partners in India and how do your partnerships work?
Mary: Through the Women’s World Banking Capital Partners Fund, we make investments in institutions with a specific focus on women. As shareholders, we have the ability to influence these institutions to prioritize female clients and leaders, leading to remarkable outcomes. While our global network comprises 61 members in 34 countries, collectively serving over 136 million women, our goal is to reach 30 million low-income women in India by 2027.
Kalpana: Investees in India include Annapurna Finance, Sitara (Sewa Grih Rin), and Bike Bazaar. Some of our partners in India include Annapurna Finance, Sitara (Sewa Grih Rin), and Bike Bazaar. We collaborate with network partners such as SEWA Bank, Ujjivan Small Finance Bank, Bank of Baroda, Kaleidofin, Annapurna Finance, Arthan, Frontier Markets, Friends of Women’s World Banking India (FWWB), and Ananya Finance for Inclusive Growth. Together, we incubate and replicate market-driven financial solutions and services for women.
We also conduct qualitative and quantitative research on the financial needs and behaviors of low-income women to demonstrate the impact of financial inclusion on their economic empowerment. Additionally, we work closely with regulators to develop inclusive and gender-diverse policies that enhance women’s leadership and financial resilience.
What have been the trends in saving behavior of Indian women? Can you elaborate on any project experience?
Kalpana: Savings serve as a gateway to other financial services for women. Although we have made significant progress in terms of absolute numbers, a significant percentage of women, particularly those in low-income groups, still hesitate to fully utilize the potential of their bank accounts. Underbanked women often have a perception that banks are not meant for their small savings.
When we started our work in India in 2019, we found that bank account access to women had reached 56%; however, FINDEX showed a gap in their usage. We worked with Bank of Baroda to pilot our solution ‘Jan Dhan Plus’ which engaged with women customers to save and adopt insurance and pension products. The project was aimed at understanding women’s saving behavior and using the learning to serve them suitable products and services.
We found that creating relevant and simplified products for women, promoting awareness and nudging behavior, strengthening the Business Correspondent network, and tracking sex-disaggregated data provides all women with sustainable access to finance. Once women customers save actively with the bank, they can be encouraged to take up assets and third-party products such as overdraft accounts, loans, and micro-insurance.
To date, the solution – in partnership with Bank of Baroda, Indian Bank, and Union Bank of India – has reached 12.3 million women across 21 states.
Today, we are also working with the Maharashtra State Rural Livelihoods Mission, UMED, to onboard more women agents (BC Sakhis) to Maharashtra villages. We are creating capacity-strengthening content and platforms to reinforce the training received by the Sakhis under SRLM. Through this, we want them to reach more women, cross-sell more banking products and services, and in return earn a decent livelihood through the commission and even grow the BC business. MSRLM offers certified training to BC Sakhis in their cities. These BC Sakhis then provide banking services at the doorsteps of the needy ones. So, this not only gives them the service or the opportunity of income but for the women that are not all allowed into the bank, they now have the facility to go for their banking. Hemant Vasekar (IAS), CEO of MSRLM opines that WWB and its technical support have helped MSRLM raise the BC Sakhi number to a good level.
Today, the Indian government is highly invested in pushing micro-insurance – be it PMJJBY or PMSBY. What has been WWB’s experience with micro-insurance?
Kalpana: Microinsurance is a product that low-income women relate to because it helps them build resilience against natural calamities and personal or economic hardships. Women have adopted PMJJBY and PMSBY when agents have explained their relevance, how much it costs, and the benefits it provides. In our work with PSBs, we found a 5X increase in the adoption of life and accidental insurance after the agent network was activated. Through a small sample study with 900 women PMJDY account holders, we got to know that women understand microinsurance products and their relevance in their lives; and this is across income levels, education levels, and occupation types. We are seeing that adoption of these is higher among women who have annual incomes lower than Rs25,000, meaning that these products are reaching the intended customers. But, going forward, banks and the government will need to focus on educating women on claims – and when to claim.
How do you view the ecosystem of women-owned MSMEs in India? What are the challenges they face and what solutions can plug those gaps?
Kalpana: India has over 16 million women-led enterprises that are primarily micro businesses, but one of the fastest-growing segments. Of these, only about 10% are registered or are availing of formal loans or have any kind of business or health insurance to prevent themselves from any financial shocks. There is a business opportunity for banks and FSPs to work with this market – the 80% women-run enterprises who are no-file or thin-file customers – who lack credit history and are unable to obtain a higher ticket-sized loan from a formal institution at an affordable rate.
MFIs and public sector banks make MUDRA loans available to women. SIDBI is currently offering affordable credit to women (Rs0.1 million to 0.5 mn) under its PRAYAAS scheme. These loans are delivered through SIDBI’s partnerships with MFIs and NGOs, and a corpus of Rs10 billion is dedicated to this initiative, reaching 80,000 women beneficiaries.
However, there is little evidence that women graduate from small to higher-ticket-size loans. As per MUDRA’s 2021-22 overall performance report, 77% of the total number of MUDRA accounts for women entrepreneurs were for ‘Shishu’ loans, 21% for ‘Kishore’ loans, and only 2% for ‘Tarun’ loans.
For women-owned MSMEs, monetary support is not the sole determinant of success. These women entrepreneurs need solutions and enablers such as family support, digital and financial capabilities, market expansion support, affordable credit, and suitable insurance products to secure them against any financial shocks.
We use a unique lens to view women entrepreneurs that trace their journey from inception to their scaling up. There are 4 opportunities to empower our women entrepreneurs:
- Families of women entrepreneurs offering their consent and support
- Enabling women entrepreneurs’ skills and capability for formal banking and digital payments
- Providing accessible, affordable loans and health insurance to them
- Creating equity in business development in e-commerce and market through gender-intentional design.
Today, many rural and low-income women entrepreneurs in India avail overdraft facilities available through their savings bank accounts, to run their businesses. Some women that belong to self-help groups avail of group loans and run them as a unit. So, WWB is working with SIDBI to build the capacities of SHGs to identify worthy borrowers who can move from group to individual loans and engage with them in the loan recovery process.