ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Gender Inequality in Banking Services

The substantial growth in women-members of self-help groups has not meant any major change in the access of women to banking. This brief note shows that women at large remain significantly deprived of banking services. By any criterion - number of accounts, amount of loans, credit in agriculture, banking across socio-economic groups, and rural and urban areas - women remain far more disadvantaged than men. In recent times, there has, in fact, been a worsening of access to banking services for women from rural areas and those from economically backward regions and social groups.

COMMENTARY

Gender Inequality in Banking Services

Pallavi Chavan

The substantial growth in women-members of self-help groups has not meant any major change in the access of women to banking. This brief note shows that women at large remain significantly deprived of banking services. By any criterion

– number of accounts, amount of loans, credit in agriculture, banking across socio-economic groups, and rural and urban areas – women remain far more disadvantaged than men. In recent times, there has, in fact, been a worsening of access to banking services for women from rural areas and those from economically backward regions and social groups.

The author thanks Madhura Swaminathan and R Ramakumar for useful comments on a draft of this article. The views expressed are personal and not of the organisation to which the author is associated.

Pallavi Chavan is an economist working on issues related to rural credit.

G
ender inequality pervades developed and developing societies in varying forms and degrees. Women in general, and poor women in particular, are deprived of basic economic opportunities and entitlements that are widely available to men. There are large disparities between men and women in terms of access to basic facilities, such as nutrition, health and education, as well as access to employment and ownership of various means of production.1

One such form of gender inequality is with regard to the access to banking services. The need to provide bank credit to women on an equitable basis has been frequently highlighted in the literature. Lack of credit constrains economic opportunities available to women – personally and to their households – resulting in d eepening their economic and social deprivation.2 In recent years, there have been policy efforts towards enhancing the access to bank credit and deposits for women with the help of micro finance, or finance to self-help groups (SHGs). The recent policy for financial inclusion in India regards microfinance as an important means of including social groups that have remained outside the ambit of the banking system.3

This brief note is a preliminary attempt to understand the extent and nature of gender inequality in the provision of banking services in India. There have, of course, been a number of studies documenting the so-called success of microfinance in the country.4 However, most of these studies have only highlighted the increasing number of women SHGs and the amount of bank credit provided to such SHGs. The question that has largely remained unanswered is whether the increasing spread of microfinance has indeed resulted in financial inclusion of women at large and has been able to counteract the existing gender inequality in the provision of banking services. This note attempts to answer the above question using data from the Basic Statistical Returns of Scheduled Commercial Banks and Small Borrowal Accounts Surveys of the Reserve Bank of India (RBI).5

Extent of Access

The available data till 2006 show that women at large remain considerably deprived of basic banking services as compared to men. The access to banking services for women can be examined by using two indicators: extent of credit supplied to women and extent of deposits received from women. If we consider credit supplied, only about 12 per cent of the individual bank loan accounts belonged to women in 2006; in the same year, women constituted about half of India’s population (48.4 per cent).6 The remaining 88 per cent of the individual bank loan accounts were held by men. If we consider deposits, the share of deposit accounts held by women was higher; in 2006, 24.7 per cent of the individual bank deposit accounts were in the name of women (Figure 1, p 19).

Certain other indicators of access to banking services also show the extent of disparity between men and women. In 2006, the number of bank deposits per 10,000 women was less than half the corresponding figure for men. For every 100 bank deposits in the name of men in the same

Table 1: Number of Loan Accounts and Bank Deposits Per 10,000 Population in 2006 by Gender

Number of Loan Accounts Number of Bank Deposits per 10,000 Population per 10,000 Population

Women Men All Women Men All

14 100 58 2,043 5,817 3,988

(14) (35)

Figures in brackets indicate percentage of credit/deposits accounts of women to that of men. Source: RBI, Basic Statistical Returns, various issues; http: //www. censusindia. gov. in.

Table 2: Per Capita Credit and Deposits in 2006 by Gender (in Rs)

Women Men All

Credit per capita 625 (15) 4,290 2,518

Deposits per capita 4,720 (29) 16,558 10,834 Figures in brackets indicate percentage of per capita credit/ deposits of women to that of men. Source: RBI, Basic Statistical Returns, various issues; http:// www. censusindia.gov. in.

Table 3: Triennium Averages of Credit to Women/Men as Per Cent of Deposits from Women/Men

Period Credit to Women as Per Cent Credit to Men as Per Cent of Deposits from Women of Deposits from Men

1998-2000

39

2001-03

4 8

2004-06 11

Source: RBI, Basic Statistical Returns, various issues.

Rural and semi-urban bank offices

COMMENTARY

Table 4: Triennium Averages of Percentage Shares of Women in Number of Loan Accounts and Amount of Agricultural Credit

Period Share in Total Number of Share in Total Amount under Accounts under Direct Direct Agricultural Credit Agricultural Credit

1998-2000 6.5 7.0

2001-03 6.8 7.4

2004-06 5.9 6.3

The figures are worked out as per cent of total bank loan accounts and credit given to individuals that is men and women taken together excluding credit to all institutional borrowers. Source: RBI, Basic Statistical Returns, various issues.

Table 5: Number of Bank Deposits Per 10,000 Population in Rural and Urban Areas by Gender

Number of Bank Deposits Per 10,000 Women Men All Persons in

Rural areas 1,702 4,726 3,256

Urban areas 3,338 8,278 5,938

Ratio of number of bank deposits per capita in urban areas/ rural areas 2.0 1.8 1.8

Rural areas 1,535 4,611 2,774

Urban areas 3,292 8,703 6,134

Ratio of number of bank deposits per capita in urban areas/rural areas 2.1 1.9 2.2

The figure for rural area has been worked out taking total number of deposits held with rural and semi-urban bank branches as a proportion of rural population in that year. Similarly, in the case of urban areas, the ratio is worked out taking the total number of deposits held with urban and metropolitan branches as proportion of urban population in that year. The figures for rural and urban population for 2006 are estimated using the exponential growth rate between 1991 and 2001. Source: RBI, Basic Statistical Returns, various issues; GoI (2001).

year, there were only 35 bank deposits in the name of women (Table 1, p 18). S imilarly, for every Rs 100 saved as deposits by a man on an average, a woman saved only Rs 29. The access to credit for women was even lower; for every 100 bank loan accounts held by men in 2006, women held only 14 loan accounts. Similarly, for every Rs 100 of bank credit given to a man, a woman received only Rs 15 (Table 2, p 18).

Evidently, commercial banks were more important for women as a means of savings than as a source of credit. Per 10,000 women in 2006, there were only 14 bank loan accounts as compared to 2,043 deposit accounts (Table 1). The share of women in total deposits outstanding was almost d ouble their share in total credit outstanding (Figure 1). To put it rather crudely, women received as credit only about o netenth of the amount of deposits they c ontributed (Table 3, p 18).

There was a rise in the share of women in total bank credit as well as total amount of deposits between 1996 and 2006 (Figure 1). Notwithstanding this rise, the

Economic & Political Weekly

EPW
november 22, 2008

shares of women in total credit and d eposits continued to be at disquietingly low levels.

Access to Agricultural Credit

Agriculture, the largest employer in India, has seen growing feminisation of its workforce in the recent years.7 In 2007, women formed about 40 per cent of the agricultural workforce in India [NCW 2008]. According to the population census of India, in 2001, women constituted about 33 per cent of the total cultivators in India as compared to 20 per cent in 1991. Despite their growing importance in the agricultural sector, women received on an average only 6 per cent of the total direct agricultural credit in the period 2004-06. The remaining 94 per cent of direct agricultural credit was given to men, who formed about 67 per cent of the total

c ultivators (Table 4).8

Differential Access: Rural and Urban

The use of commercial banks as an agency of savings was more widespread among urban women than rural women (Table 5). In 2006, the number of bank deposits per 10,000 women in urban areas was double the number of bank deposits per 10,000 women in rural areas. For every rupee saved by a rural woman as bank deposit, a woman from an urban area saved Rs 4.50 (Table 6).

The disparity between

women from rural and urban areas in access to banking services seemed to have increased in the recent years. The ratio of the number of deposits per 10,000 women in urban areas to rural areas increased between 2001 and 2006 (Table 6). The increase was even more striking if we consider the ratio of the per capita amount of deposit from women in urban areas to rural areas (Table 6). Further, between 1996 and 2006, there was a fall in the share of deposits mobilised from women through rural and semi-urban bank offices

30 Percentage share in number of Percentage share in deposit
25
20
15
10
5
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
deposits (left axis) amount (left axis) Percentage share in number of loan accounts (right axis) Percentage share in loan amount (right axis)

Figure 1: Percentage Shares of Women in Total Number and Amount of Loan and Deposit Accounts

The figures are worked out as per cent of total credit to/deposits from individuals that is men and women taken together excluding credit/deposits of all institutional borrowers/depositors. Source: RBI, Basic Statistical Returns, various issues.

Figure 2: Percentage Shares of Rural Plus Semi-Urban and Urban Plus Metropolitan Offices in Total Amount of Deposits from Women

65

Urban and metropolitan bank offices 60 55 50 45 40 35 30 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: RBI, Basic Statistical Returns, various issues.

Table 6 Amount of Bank Deposits Per Capita in 2006 by Gender (in Rs)

Amount of Bank Deposits Per Capita in Women Men All

2001 Rural areas 1,850 5,990 3,978

Urban areas 6,846 22,465 15,064

Ratio of amount of bank deposits per capita in urban areas/rural areas 3.7 3.8 3.8

2006 Rural areas 2,380 8,678 5,611

Urban areas 10,624 35,492 23,685

Ratio of amount of bank

deposits per capita in urban

areas/rural areas 4.5 4.1 4.2

See footnote under Table 6. Source: RBI, Basic Statistical Returns, various issues, GoI (2001).

(taken together). This meant an increase in the share of deposits mobilised from women through urban and metropolitan offices during this period (Figure 2).

Interestingly, among women and men from the rural and urban areas, there was only one category that recorded a rise in the number of bank deposits per 10,000 persons between 2001 and 2006: urban men (Table 5).

Access across Regions

In terms of the total amount of deposits mobilised from women, the shares of southern and western regions were considerably higher than the shares of northeastern, eastern and central regions in 2006 (Table 7, p 20).9 The shares of eastern and central regions in the total amount of deposits from women (as well as the total number of deposit accounts)

COMMENTARY

Table 7: Percentage Shares of Women in Total Amount of Bank Deposits by Regions

Region Share in Share Share in Deposit in Deposit Female Accounts Amount Population

1996 2006 1996 2006 2001

Northern 17.5 17.0 22.2 22.0 12.6

North-eastern 2.5 2.2 1.6 1.7 3.8

Eastern 15.3 14.5 11.9 11.2 22.2

Central 18.8 17.8 14.1 13.1 24.7

Western 16.1 17.7 23.6 23.4 14.3

Southern 29.8 30.8 26.6 28.6 22.4

India 100.0 100.0 100.0 100.0 100.0

The regionwise classification follows from the Basic Statistical Returns taking all states included therein excluding all union territories expect Delhi. Source: RBI, Basic Statistical Returns, various issues.

Table 8: Number of Bank Deposits Per 10,000 Female Population by Regions

Region 1996 2006
Northern 2,837 2,617
North-eastern 1,280 1,177
Eastern 1,335 1,335
Central 1,491 1,452
Western 2,173 2,535
Southern 2,479 2,922
India 1,936 2,043

See footnote under Table 9. Source: RBI, Basic Statistical Returns, various issues.

Table 9: Share of Bank Accounts and Amount of Credit to Female Borrowers (under Small Borrowal Accounts) from Dalit and Adivasi Categories (in %)

Year Share of Dalit and Share of Dalit and Adivasi
Adivasi Women Women in Amount
in Number of Accounts of Credit
1997 7.1 4.8
2001 3.9 1.9
2004 2.8 1.6
2006 2.2 1.3

Small borrowal accounts indicate accounts with individual credit limit of up to Rs 2 lakh since 1999 and Rs 25,000 before that. Source: RBI,Survey of Small Borrowal Accounts, various rounds.

Table 10: Average Amount of Credit (under Small Borrowal Accounts) Received by Dalit/Adivasi Female Borrower Per Every Rs 100 Received by a Female/Male Borrower from Other Caste Categories (in Rs)

Variable 1997 2001 2004 2006
Average amount of credit to a
dalit/adivasi female borrower
per Rs 100 of credit to a female
borrower from non-dalit/adivasi
categories 35 17 13 9

Average amount of credit to a dalit/adivasi female borrower per Rs 100 of credit to a male borrower from non-dalit/adivasi categories 7 2.4 2.1 1 Source: RBI,Survey of Small Borrowal Accounts, various rounds.

were significantly lower than the shares of female population residing in these regions. Moreover, there was stagnation, or even a fall, in the shares of the northeastern, eastern and central regions with respect to the total amount of deposits mobilised between 1996 and 2006 from women in the north-eastern, eastern and central regions between 1996 and 2006. In the same period, there was a rise in the number of bank deposits per 10,000 women in the southern and western regions (Table 8).

women. There was also a fall in the
number of bank deposits per 10,000
20

Across Socio-economic Groups

The disparity in terms of access to banking services between women from various socio-economic groups has also widened in the recent period. Between 1997 and 2006, the share of dalit and adivasi women

– socio-economically one of the most backward sections of the population – in total bank credit (under small borrowal accounts) declined steadily.10 In 2006, dalit and adivasi women received only 1.3 per cent of the total credit given under the small borrowal accounts as compared to

4.8 per cent in 1997 (Table 9).

If we assume that a woman not belonging to dalit and adivasi groups received Rs 100 as bank credit, an average dalit/ adivasi woman received only Rs 9 in 2006. The corresponding figure for a dalit/adivasi woman was higher at Rs 35 in 1997. The disparity was larger if we compared a dalit/adivasi woman with a man not belonging to dalit and adivasi groups. In 2006, a dalit/adivasi woman received only Re 1 as credit from banks for every Rs 100 received by her male counterpart from non-dalit/adivasi groups (Table 10). Here again, there was a rise in disparity; the corresponding amount for a dalit/adivasi woman in 1997 was Rs 7.

Concluding Observations

To conclude, while there has been a general spread of the basic banking services in India over the years, women remain largely deprived of these services. Women contribute about one-fifth of the individual savings mobilised through bank deposits. However, women receive only around one-tenth of the total individual credit from banks.

Further, increase in the spread of banking services to women has not been distributed fairly across various sections of women. The increase in spread of bank deposits has taken place primarily for urban women. Women from southern and western regions (comprising the historically v anguard states in banking development) have seen a further expansion in their access to bank deposits, while the access to women from north-eastern, eastern and central regions (comprising the historically deprived states in banking development) has relatively narrowed down. Dalit and adivasi women belonging to socioeconomically backward groups have seen a fall in their share in total bank credit.

As noted earlier, in recent times, microfinance has emerged as an important means of credit delivery from banks to the poor, especially to poor women. The bank-SHG linkage programme has been a unique way in India of involving public banks in the provision of credit to SHGs. This programme was instrumental in financing about 22.3 lakh SHGs between 1992 and 2006. Of these SHGs, over 90 per cent had only women members.11 Notwithstanding these affirmative efforts, microfinance still remains a minuscule part of total bank credit in India. For instance, the total cumulative credit disbursed through bank-SHG linkage programme right from its inception in 1992 to 2006 formed only 6 per cent of the total agricultural credit disbursed in just one year of 2005-06.12

Since the early 1990s, studies have indicated a decline in the access to banking services for rural areas, for certain geographical regions and for historically underprivileged socio-economic groups.13 Given the prevalence of gender inequality, these changes have disproportionately worsened the access to banking services for women in each of these sectors/regions/groups despite the initiative of microfinance. This note highlights the critical and urgent need for a more definite gender perspective to the policy of financial inclusion instead of regarding microfinance as the only solution to women’s banking.

Notes

1 See Sen (2001) for an exposition of the various forms of gender inequality in developed and developing countries.

2 See the objectives stated in the United Nations Fourth World Conference on Women held at Beijing in 1995 at http://www.un.org. Also see the discussion on “good mother hypothesis” in the literature which points towards higher coincidence between mother’s income and family’s basic needs than father’s income; see Blumberg (1991) and Braunstein and Heintz (2005).

3 Financial inclusion has been officially defined as the “provision of affordable financial services” to those who have been left unattended or underattended by the formal agencies of the financial system [RBI 2006a]. These financial services

EPW

COMMENTARY

include “payments and remittance facilities, savings, loan and insurance services” (ibid). Also see RBI (2006b).

4 Most of these studies have used data collected through field surveys taking a sample of women from a given region/state. See for instance, “Microfinance and Empowerment of Scheduled Caste Women: An Impact Study of SHGs in Uttar Pradesh and Uttaranchal Sponsored by the Planning Commission” at http://www. Plannin gcommission.nic.in. See also various impact studies sponsored by NABARD, such as MYRADA (2002) and Jayaraman (2005).

5 The RBI started to publish data on women in the Basic Statistical Returns from 1996 onwards. The Small Borrowal Account Surveys started in 1997 and till 2006, four rounds of surveys have been conducted, each of which provides information on women separately.

6 The credit/deposits of individuals refers to credit/ deposits of men and women taken together. It excludes credit/deposits of all institutions.

7 For details about the contribution of women in the agricultural sector, see NCW (2008).

8 Such low access to agricultural credit has considerable bearing on the fact that land is the crucial determinant for availing agricultural credit from formal institutions and land titles in the country, as is well known, are almost entirely held by male members in the family.

9 The regionwise classification of states is drawn from Basic Statistical Returns of the RBI after excluding all the union territories except Delhi.

10 Small borrowal accounts (SBA) are accounts with a credit limit of Rs 2 lakh. Given their low credit limit, SBAs are for borrowers having relatively small credit requirements. They constituted almost the majority of the total loan accounts held with banks, their share nearing 90 per cent in 2006. However, they controlled only about 16 per cent of the total bank credit. About two-thirds of these accounts were held with rural and semi-urban offices of commercial banks, while one-third of these accounts were for direct finance under agriculture and allied activities.

11 See details of the bank-SHG linkage programme in

Progress of SHG-Bank Linkage in India – 2005-06

at http://www.nabard.org.

12 Both these figures refer to credit given by commercial banks, regional rural banks and cooperative banks together. For a similar observation regarding the scale of microcredit, see Kalpana (2005).

13 See the collection of articles in Ramachandran and Swaminathan (2004) and Chavan (2007).

References

Blumberg, Rae (1991): ‘Income under Female versus Male Control’ in Rae Blumberg (ed), Gender, Family and Economy: The Triple Overlap, Sage Press, Newbury Park.

Braunstein, Elissa and James Heintz (2005): ‘Gender Bias and Central Bank Policy – Employment and Inflation Reduction’, paper available at http:// www. networkideas. org.

Chavan, Pallavi (2007): ‘Access to Bank Credit Implications for Dalit Rural Households’, Economic & Political Weekly, 4 August.

GoI (2001): Final Population Totals – Census of India 2001, Government of India, New Delhi.

Jayaraman, R (2005): ‘Performance Analysis of F isherwomen Self-Help Groups in Tamil Nadu’, report submitted to National Bank for Agriculture and Rural Development, Mumbai.

Kalpana, K (2005): ‘Shifting Trajectories in Microfinance Discourse’, Economic & Political Weekly, December.

MYRADA (2002): ‘Impact of Self-Help Groups (Groups Processes) on the Social/Empowerment Status of Women Members in Southern India’, Mysore Resettlement and Development Agency, paper presented at the seminar on SHG-bank Linkage Programme, New Delhi.

NCW (2008): Draft National Policy for Women in Agriculture, National Commission of Women, available for comments at http://www.ncw.nic.in.

Ramachandran, V K and Madhura Swaminathan (eds) (2004): Financial Liberalisation and Rural Credit in India, Tulika Books, New Delhi.

RBI (2006a): ‘Financial Inclusion and Millennium Development Goals’, Address by Usha Thorat, Deputy Governor of the Reserve Bank of India, Reserve Bank of India, January 16, available at http://www.rbi.org.in.

– (2006b): ‘Economic Growth, Financial Deepening and Financial Inclusion’, Speech by Rakesh Mohan, Deputy Governor of the Reserve Bank of India, Reserve Bank of India, November 20 at http://www.rbi.org.in.

RBI (various issues): Basic Statistical Returns of Scheduled Commercial Banks in India, Reserve Bank of India, Mumbai.

RBI (various rounds): ‘Survey of Small Borrowal Accounts’, Reserve Bank of India Bulletin, Reserve Bank of India, Mumbai.

Sen, Amartya (2001): ‘Many Faces of Gender Inequality’, Frontline, Volume 18, Issue 22, 27 October09 November.

Ashoka Trust for Research in

Ashoka Trust for Research in Ecology and the Environment

Bangalore, Darjeeling and New Delhi

Ecology and the Environment www.atree.org

ATREE Small Grants Program

Ashoka Trust for Research in Ecology and the Environment (ATREE), Bangalore, India invites proposals from individuals for research projects under its Small Grants program. ATREE focuses on application of science to conservation of nature and sustainable use of natural resources by generating new knowledge, building human capacities, and working towards improving environmental governance. ATREE’s commitment to conserving biological diversity spans both ecological and socio-economic concerns bringing a unique interdisciplinary approach to addressing conservation issues in India.

Program Details: The Small Grants Program recognizes that there is a wealth of information and expertise at small scales that can be drawn upon for more effective conservation. Project proposals for funds from Rs 50,000 to Rs 1 lakh for project duration of 1 year will be considered under the program. ATREE’s work is housed largely under three centers which, address different issues in Conservation and sustainability research. Project proposals should address the areas of research focus as identified under each center. The selected applicant will be assigned an advisor for the research activity at the Center he/she chooses, or can pursue independent research depending on the proposal submitted to the committee.

Research focal areas for the small grant program under each center is as follows: Center for Conservation Science: 1) Structure and function of ecosystem services in the context of major threats such as climate change. 2) Endangered or lesser-known taxa.

Center for Conservation Governance and Policy: 1) Analysis, implementation and monitoring of policies with environmental impact.

Center for Ecological Informatics: 1) Spatial analytical modeling for conservation science. 2) Development of tools/techniques for applications in WebGIS or community science for conservation.

Expected outputs: A progress report at the end of first six months after which the second installment will be released. A complete written report in a given format towards the end of the year which will be uploaded on ATREE’s website. A research or popular article/s based on the report.

Individuals should be affiliated with an institution and may request use of ATREE facilities at one of its locations if needed. Proposals must follow the prescribed format and be accompanied by contact details of one referee. The proposal should clearly mention the Center under which the project should be considered. Grants can be used for fieldwork, research writing, or internships with ATREE faculty. Decision of the selection committee will be final. For the prescribed format and more details please visit (http://www.atree. org/small_grants.html). Proposals should be sent preferably in electronic format to grants@atree.org or addressed to The Director, Ashoka Trust for Research in Ecology and the Environment (ATREE), 659 5th A Main, Hebbal, Bangalore, 560 024, Karnataka, India.

Economic & Political Weekly

EPW
november 22, 2008

To read the full text Login

Get instant access

New 3 Month Subscription
to Digital Archives at

₹826for India

$50for overseas users

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top