This article is written by Devina, a gender and inclusion specialist.

This article is the first in a series of four articles exploring innovative gender-responsive lending approaches in India through the perspectives and experiences of female customers from economically and socially marginalised groups.

  • The problem: Digital lending offers the potential for financial empowerment to women in India, yet numerous challenges hinder its effectiveness.
  • Why it matters: Lending via smartphones has enormous potential for financial inclusion in underserved areas of the country.
  • The solution: Listening to the voices of women borrowers and designing inclusive solutions to break down barriers.

In the bustling communities of underserved areas in India, digital lending via mobile phones has emerged as a promising solution for financial inclusion. However, the experiences of women borrowers in these communities reveal a more complex reality. Through in-depth research conducted with 150 female borrowers, we delve into their journeys with digital lending. Let's uncover the challenges faced by them, often due to societal norms, limited digital literacy and inhibited access to resources.

The benefits and barriers to digital lending

Digital lending offers a glimmer of hope for women in underserved communities. It promises convenience, accessibility and the potential for financial empowerment. With just a few taps on a mobile phone, women can access loans, receive funds directly and manage repayments effortlessly. The promise of financial independence and improved livelihoods seems within reach.

The voices of women borrowers provide valuable insights, highlighting the need for tailored support, simplified processes, and collaborative efforts.

While digital lending holds immense potential, numerous challenges hinder its effectiveness for women in underserved communities. These challenges are rooted in societal norms and behavioural patterns that impact women's access to and usage of mobile phones.

Meena’s story

Meena, a 36-year-old woman from a village a little outside of Pollachi (Tamil Nadu, India), started borrowing through an SHG (self-help group) based model two years ago to set up her own tailoring business. She shares, “I don't feel comfortable using a smartphone for financial transactions. It's not considered 'proper' for women in our community to handle money matters digitally.” She added that she, amongst many other women in the village, still prefers to manage financial transactions in cash. Despite owning mobile phones, they often are discouraged to keep topping up their mobile phone plans for more data or calling minutes. She adds, “My mother-in-law owns a phone and uses wallets. But if I use it, it’s incorrect for a married woman. I don’t prefer to have these uncomfortable discussions at home. I am happy using cash.”

Meena's experience reflects the influence of deeply ingrained societal norms and cultural expectations that shape women's behaviour. The fear of judgement and the pressure to conform to traditional gender roles restrict women's access to and use of available services. These create barriers to their access and autonomy as women envision independence and entrepreneurial growth for themselves.

Additionally, we found that amongst 78% of our respondents, mobile phones were used and controlled by other family members, despite being owned by the women. In all of the above cases, these phones were handled by male family members, including husbands, fathers, brothers and sons, demonstrating a power dynamic among gender roles at home. This further perpetuates an imbalanced reliance within households.

Pooja’s story

“I don't have access to a smartphone at all times. My husband takes it to work, and I use it only once he’s back and my chores are completed,” shares Pooja, a 42-year-old woman based in Saharanpur. She adds, “I want to grow my tiffin service and start using WhatsApp to find customers. When I tell my husband that I might need to use the phone to do online payments, he says that this isn’t what runs the household and that I shouldn’t dream beyond my means. My son is 20 and sometimes I use his phone number for customers to pay me directly.”

In addition, digital literacy is a critical factor affecting women's ability to utilise digital lending platforms effectively. 57% of our respondents did not feel confident using smartphones and mobile applications. Over 80% felt unsure about using online payment methods. “I struggle with understanding these mobile apps. I am too nervous to get a loan from my phone — what if I make a mistake? I haven’t gone to college to understand this complicated language. I prefer to go to my SHG or someone in the community if I need financial help,” shares Rekha, a 54-year-old borrower from Bangalore.

Building digital literacy

Building digital literacy among women is crucial for fostering their financial independence and confidence in using digital finance. It can enable women to navigate the digital landscape with ease, enabling them to access financial services, make informed financial decisions, and manage their finances effectively. By acquiring the necessary skills and knowledge, women can overcome barriers such as limited access to traditional banking services and societal norms that discourage their financial autonomy. It can open doors to entrepreneurial opportunities and empowerment, enabling them to build a secure future and participate more fully in the digital economy.

In addition, it is clear that addressing these social and cultural barriers is essential for achieving true financial inclusion for women like Meena and Pooja. How do we work towards creating awareness and spaces that recognise and respond to the specific needs and concerns of women borrowers, fostering an environment of trust and understanding? By designing solutions that respect cultural norms and providing tailored support, financial institutions can empower women to confidently embrace digital financial services while navigating the delicate balance of societal expectations.

Digital lending has the potential to uplift and empower women in underserved communities, but it must address the complex challenges that hinder its effectiveness. By understanding the impact of societal norms, limited digital literacy and access to smartphones, there are numerous opportunities to design inclusive solutions. The voices of women borrowers provide valuable insights, highlighting the need for tailored support, simplified processes, and collaborative efforts to promote digital finance. How do we build towards a future where digital lending becomes a catalyst for women's financial inclusion, fostering economic empowerment and unlocking their full potential?

Read the second article, Part 2: The transformative potential of female agent networks, in this four-part series.

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