Financial Inclusion = Participation + Access

Priyanka Jain, Delhi Community Manager
Delhi, 2 December 2014

It's expensive to be poor, a famous phrase of Barbara Ehrenreich's book Nickel and Dimed: On (Not) Getting By in America, sums up quite well the demerits of not having access to banking services. It tells the story of many unbanked Americans but also reflect the life of millions of poor families across the globe. These families live on the edge of destitution and spend high percentage of their income replacing traditional banking services, usually with quick fixes that charge usurious rates. On the one hand, Delhi has made considerable progress increasing access through microfinance. Yet, the road to financial inclusion has many stones unturned.

Among Delhi's poor, financial literacy skills are still lacking. For example, large numbers of boys and girls who run away from their homes in villages come to the city for survival and don't have any support mechanisms. They work in the informal sector to earn minimal wage and usually spend it on unhealthy items such as tobacco, alcohol, and drugs. One particular NGO, Sanchayan Society, is dedicated to disseminating financial literacy among youth, urban migrants, and the rural population. It conducts sessions on the importance of saving money for their future, the basics of banking, how to obtain financial identity like PAN cards, and developing entrepreneurship skills. The workshops are designed in a practical manner, comprised of games and activities such that these underprivileged youth can understand money and improve their "financial happiness." There are other initiatives being undertaken by the Reserve Bank of India and the Securities and Exchange Board of India. In addition, many institutions — including Swadhaar FinAccess, Jana Urban Foundation, Samhita Community Development Services, the Parinaam Foundation and Ujjivan Financial Services — are working on pilot models of financial sustainability to address this gap.

Besides familiarity with financial tools, products, and programs — old and new — institutions need to have the flexibility to tailor banking products with the client's cash flows and incomes as well as their needs. To deliver this, SEWA Delhi has been partnering with the Mission Convergence department of the Government of Delhi since 2011. Financial inclusion is one of the focus areas of Mission Convergence, with the aim of ensuring this for 100,000 women, spread across all districts of Delhi, by 2016. The plan is to organize financial literacy training sessions for women in order to empower them to make sound financial decisions and to strengthen the operations and financial systems of the cooperative to ensure better service delivery and risk management. In 2012, operations had been extended to 15 areas, with 6,000 members; 7,500 women have been reached through the financial literacy trainings.

In addition, Mahila SEWA Urban Cooperative Thrift and Credit Society provide doorstep services from Bank Sathis who go door-to-door or to the work areas in order to collect savings, loans, and interest due. Depending on their cash flows and incomes, members can choose from a bouquet of savings products. And the interest charged on loans is just 1.5 percent, as against 5 to 10 percent being charged by exploitative moneylenders.

There are many pieces to the financial inclusion puzzle. Relevant awareness, financial education, and user-centric products are critical pieces that will make people favor banking services over informal sources like money lenders and prevent the accounts from turning dormant within months after being opened.

Photo: UN Women Asia & the Pacific

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