The just concluded FE Fintech Summit 2023 in Mumbai that saw some of the best minds in the financial and fintech arena brainstorm, discuss and debate the changing investing and fintech landscape, seems to have retained an enduring interest. While aspects to watch out for and factors to guard against stayed in focus across several panel discussions, most also seemed interested in the session that took a view of this changing landscape from the lens of financial inclusion.
There was therefore much to learn and listen from the valedictory address at the summit delivered by Jayshree Vyas, managing director of Shree Mahila Sewa Sahakari Bank or SEWA Bank to many, a leading cooperative bank, based out of Ahmedabad, that has poor self-employed women as its members and a client base of 6,00,000.
Sharing invaluable insights, she explained the evolution cycle to financial inclusion and the factors that had to be kept in mind if financial inclusion had to be truly meaningful in its impact and stay transformational to the lives of the poor and the financially excluded. She was drawing on the rich experience she had gathered in the field over the past four decades and her association with SEWA Bank since 1986. Jayshree Vyas, a chartered accountant and one who had worked closely with the iconic SEWA founder Ila Bhatt, or Ila ben Bhatt to many, poor self-employed women of Gujarat.
Jayshree Vyas began by saying that a lot had changed over the past two decades and largely on account of the measures taken by the government and the Reserve Bank of India. This included a clearer articulation for the space and guidelines that helped the concept of financial inclusion take deep roots.
In a country, where nearly 90 per cent of the poor workforce was in the informal sector, making financial inclusion meaningful and sustainable was crucial. For this, while she felt, opening of a bank account was a first major step towards financial inclusion, the measures to make a difference to the lives of the poor lay in understanding their profile and the spending habits.
Typically, many of them, at least from her experience at SEWA, were small traders, artisans, vegetable vendor or just daily wage earners.
“They are all economically active people with many working 10 to 12 hours a day and needing access to formal sources of banking and insurance for they all also needed working capital,” she said.
Giving the example of a vegetable vendor heading out to market at 4 am to source material, Vyas said that over the years, the only source for funds for her was typically the money lender. Bridging that gap was access of alternate source of funding was crucial.
Once there is clarity on the profile of the poor borrower and the immediate needs attended to, it was important to get a good grip on her financial behaviour. “Our experience showed us that they were mostly working and also thinking on a daily basis with little scope for future planning.” Because of this mindset of thinking on a daily basis, she said, whenever there were times of difficulty or challenges in their personal lives – triggered by health or social compulsions – they would typically go back to the money lender and get further entrenched in debt. This was where the next level of intervention was needed and the need to evolve customised financial services that looked at savings, insurance or pension.
Micro insurance
To address this, she said, SEWA bank devised an integrated micro insurance scheme for the poor self-employed women and introduced it for the first time in the country, back way in 1992, and within the first three years, covered over 1,50,000 self-employed women and then created a separate insurance entity – VIMO (insurance in Gujarati) SEWA Cooperative.
Housing finance was another need and a scheme was also devised around the same time and generated a good interest and soon over 20,000 poor self-employed women began accessing it.
For this also a separate entity – The Mahila Housing SEWA Trust or MHT was created. Now, because of Pradhan Mantri Awas Yojana, women have access to housing loans.
Saving is also critical and especially for those from smaller towns and cities. For this, saving groups of poor self-employed women (or Self Help Groups – SHGs) were set up around 1992 and in the initial years involved as many as 5000 villages across nine districts of Gujarat. At present, there are 21,000 SHGs across twelve districts of Gujarat.
Beyond financial literacy
During this journey, it was realized that women should also build their financial management skill, which starts from understanding importance of thinking about long term instead of living and thinking on day to day basis, building other financial management skill which will help them to make proper use of financial services available to them. Therefore in 2001, SEWA Bank introduced a financial literacy programme, a first-of-its-kind in the country, with an aim to create awareness about financial and non-financial services and how they could be linked to their different lifecycle needs of the poor self-employed women while also familiarising them with the concepts like the power of compounding and fungibility of money. Eventually, in 2006, was able to introduce a Micro Pension Scheme for the poor self-employed women such as vegetable vendors, tailors and small traders.
Technology Training in use of technology was also very important element if measures at financial inclusion are to succeed. Today, out of 6 lakh women at SEWA Bank, 45 per cent are using the platform of UPI, according to Vyas. Her thoughts seemed to resonate with many in the audience and hopefully got many in the fintech world to review or fine tune their service offerings.