Why financial literacy is crucial for women’s empowerment in india

22/07/25

Blog

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Though women in India control roughly 30% of household financial decisions and have equal rights to bank accounts, property ownership, and financial services, financial literacy is the one core enabler that must be implemented to unlock their full potential.

A woman who doesn’t understand compound interest will struggle to make optimal savings decisions. One who can’t interpret loan terms may accept unfavourable credit arrangements. Someone unfamiliar with insurance products might leave her family financially vulnerable. These individual knowledge deficits, over time, aggregate into systemic economic disadvantages that affect entire communities.

The Role Of Government Initiatives In Building Financial Literacy For Women

The Pradhan Mantri Jan Dhan Yojana has opened over 460 million bank accounts since 2014, with women accounting for 55% of new account holders. More significant than the numbers is the behavioural change – women who previously relied entirely on informal savings mechanisms now participate in formal financial systems.

State governments have developed complementary programmes to promote financial literacy drive through women’s collectives and in adult literacy programmes. These have produced measurable improvements in household savings rates among participating women, especially when implemented in collaboration with child protection NGO ecosystems.

The digital payment revolution accelerated during the pandemic, creating new opportunities for financial inclusion. Women who had never used formal banking services began conducting transactions through mobile applications, often learning digital financial management simultaneously.

Measuring the Importance of Financial Literacy

India has shown steady improvement in women’s financial decision-making autonomy.  The change is most pronounced in rural areas where traditional gender roles around money management were most restrictive. Villages that participated in structured financial literacy programs show higher rates of women-owned business registration and formal credit utilisation compared to control areas.

Self-help group members demonstrate significantly higher financial literacy scores than the general population. Women who participate in group-based financial education programs retain knowledge better and apply it more consistently than those who receive individual training.

Microfinance institutions report improved loan repayment rates in areas where borrowers have received financial literacy training. This suggests that knowledge about financial management translates into better economic outcomes for both individuals and institutions.

Read Also: Explore Top 10 Self-Made Women Entrepreneurs in India

Technology As An Enabler In Creating Financial Literacy

Mobile banking applications designed with women users in mind have simplified financial management for millions. Features like vernacular language support, voice-based navigation, and integration with government welfare schemes make banking accessible to women with limited formal education.

Digital platforms allow women to access financial services without requiring male family members to accompany them to bank branches. This privacy enables independent financial decision-making that might not be possible in more traditional settings.

Financial technology companies have developed products specifically for women’s economic activities. Applications that help manage small business cash flows, track household expenses, and plan for children’s education costs address practical needs that general-purpose financial tools often overlook.

The growth of digital payment systems has created economic opportunities for women entrepreneurs. Those who understand online payment processing, digital marketing, and e-commerce platforms can expand their businesses beyond local markets.

Impact of Financial Literacy on Women’s Entrepreneurship

Women with higher financial literacy rates start businesses at significantly higher rates than those without such knowledge. Understanding cash flow management, profit calculations, and basic accounting enables women to move from subsistence activities to scalable enterprises.

Access to formal credit markets depends heavily on financial literacy in India. Women who understand loan terms, interest calculations, and repayment schedules can negotiate better financing arrangements and avoid predatory lending practices. Government schemes supporting women entrepreneurs achieve better outcomes when combined with financial education programs.

Women-led businesses that maintain proper financial records have better survival rates and growth trajectories. Financial literacy training that includes bookkeeping and tax compliance helps ensure long-term business sustainability.

Intergenerational effects

Financially literate mothers are more likely to involve daughters in household financial planning and teach them money management skills. This knowledge transfer helps break cycles of financial dependence that have persisted across generations. Children of financially literate mothers demonstrate better understanding of saving, budgeting, and financial planning. Schools in areas with high maternal financial literacy report students who are more engaged with mathematics and economics curricula.

Family financial stability improves when women participate actively in financial decision-making. Households where women understand financial planning show higher savings rates, better insurance coverage, and more strategic investment in children’s education.

The economic empowerment of women through financial literacy creates positive feedback loops within communities. As more women gain financial independence, social norms around women’s economic participation gradually shift to become more supportive.

Role Of Civil Society Organisations In Promoting Financial Literacy In India

Organisations like Bal Raksha Bharat (a well-known child protection NGO) complement government financial literacy programs by addressing the intersection of child welfare and women’s economic empowerment. Powered by education donation, their community-based approach helps identify and support women who might not access formal financial education programs through traditional channels.

Non-governmental organisations provide crucial implementation support for financial literacy initiatives, particularly in reaching marginalised communities. Their existing relationships with women’s groups and understanding of local contexts make them effective partners in delivering financial education. This makes education donation a primary and mission-critical source of funding, even more relevant today.

These partnerships ensure that financial literacy programs address real-world constraints that women face, such as time limitations, mobility restrictions, and cultural barriers to participating in formal financial systems.

Bal Raksha Bharat