Kalpana Ajayan On Policy Shifts That Are Needed To Promote Financial Inclusion
Women's World Banking Regional Head Kalpana Ajayan shares policy shifts that are needed to promote financial inclusion
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00:00 Hello and welcome. You're watching BQ Prime and we're at the Global Fintech Fest once
00:04 again. Joining me for a conversation is Ms Kalpana Ajayan, who's the regional head South
00:08 Asia of Women's World Banking. Ms Kalpana, thank you so much for speaking to BQ Prime.
00:13 Yeah, morning and it's such a pleasure and thanks for having me here.
00:16 Ma'am, when we talk about gender bias in the financial sector, time and again, the point
00:23 of social constructs keeps coming up that they are fueling the gender bias. But do you
00:27 think the financial or the lending institutions also play a part in this?
00:31 Most definitely. And such a relevant question. While the context of where the woman comes
00:36 from, which is the whole social construct, etc. is definitely a limiting factor when
00:42 it comes to women's participation in the formal financial system. There's also the other side,
00:48 which needs to be equally welcoming of the woman, right? And that is the financial institutions.
00:53 Unless both partner up, it's virtually impossible to make something that has been going on for
01:01 years. How do you start making a dent in that? So yes, to answer your question, the commitment
01:08 towards gender intentionality by financial institutions, it begins with the commitment.
01:14 Once you have the commitment, then the rest of it follows, which is in terms of the products,
01:18 services, channels, how best to reach the woman and ensure that she is participating
01:25 in the formal financial system. These are things that of course, financial institutions
01:28 can play a part in.
01:29 All right. There's been so much conversation about UPI being a big success in India, and
01:36 it's still expanding its footprint. But now we also have the CBDC coming in. So if we
01:40 talk about that, do you think it can encourage financial inclusion?
01:45 Yes, definitely. I still think CBDC is a very welcome step, of course. And it's been launched
01:53 with the right intention. It's still in the pilot phase. I still think it has some time
01:57 to, you know, some ways to go. In the low income women segment that Women's World Banking
02:04 operates in, our endeavor has been how to bring the woman into the formal financial
02:09 system, which is the whole financial inclusion agenda. And in that UPI has been a phenomenal,
02:16 phenomenal enabler, like the whole digital public infrastructure, I would say. And India
02:20 has been leading the way as far as digital public infrastructure is concerned. And Women's
02:24 World Banking is also part of, you know, things like G20, GPFI, the Global Partnership for
02:30 Financial Inclusion, where, you know, our work that we have done at WWB with very large
02:36 public sector banks, with the Jandhan accounts, you know, 55% of Jandhan accounts, you know,
02:44 and there's 45 crores of Jandhan account in this country are women. And how do you ensure,
02:50 yes, access is no longer an issue, a woman now has a account in the formal financial
02:54 system, but is she using it? Has she been taught how to use it? Has she been made aware
02:59 of all the products and services that are available to her as a Jandhan customer? This
03:03 is where we've done the work. And we find that this whole Jam Trinity, you know, the
03:08 Jandhan Aadhaar, along with the, you know, UPI, etc, form a very, very powerful, you
03:15 know, tool to nudge her in to come into the formal financial system. We see it not just
03:20 in the savings world, we also see it in the credit space as well, right? I mean, we have
03:27 millions of women entrepreneurs, mostly in the nano and micro category. And how do we
03:33 ensure that she is taking full advantage, you know, of the marketplace out there and
03:39 equally access credit that she needs, which is so vital, just so hard to come by all through
03:45 digital means. So, UPI and the role that it plays in the overall digital public infrastructure,
03:52 I think, is a known story. I think we'll need to wait, you know, for the CBDC to play out.
04:00 I do believe that it will complement, one will complement the other, but I think it's
04:03 still early days.
04:04 Fair enough. That's a very good point, ma'am. You spoke about credit just now. So there's
04:10 also been a lot of conversation about fintechs getting into the credit space. So do you think
04:15 that there's a need to address the credit disbursement from a gender side now?
04:21 That's a very important topic, because lack of access to credit is one of the most important
04:29 reasons, you know, why there are not that many women entrepreneurs in the formal system.
04:36 And second, even if there are women entrepreneurs, they are more concentrated in the nano and
04:43 the micro segment, you know, not really going up to the even the, you know, SME segment
04:50 because of lack of confidence, her own context, inability to take risk, the family structure,
04:57 all of this come in the way. In this scenario, you know, the fintechs play a very, very crucial
05:02 role in terms of access to credit.
05:06 However, we at Women's World Banking have done work in multiple geographies around this
05:11 very important area called algorithmic bias when it comes to fintechs. Like, I mean, AIML
05:17 is the way, you know, technology is used, you know, to lend smarter ways, especially
05:25 for women who are either no file or thin file customers. They don't have a credit footprint
05:31 in the formal financial system. So, you know, alternative data, etc. are being used very
05:36 smartly by the fintechs. However, while they're very smart in kind of identifying these women,
05:42 you know, is there an inherent bias? Like, why is still the portfolio of women entrepreneurs
05:48 receiving credit from fintechs still a very small percentage of their overall portfolio?
05:53 And then when you actually dig deeper and start peeling the onion, you realize that
05:56 it while the bias starts from, you know, algorithmic bias, it probably also starts from the sourcing.
06:01 Where are we going to source these women entrepreneurs who are in need of credit? Are we looking
06:06 at the right places? Are we messaging the right way? Are we communicating, you know,
06:11 understanding her context? All of these actually play a very important role. And we at Women's
06:16 World Banking have done some work in multiple geographies, including India, with some of
06:20 the leading fintechs to see how we can address. So tools like a fintech scorecard is something
06:27 that we have developed globally, you know, and it is for a fintech and it's free. It's
06:34 available on our website. And any fintech can go there and check, you know, what their
06:39 bias score looks like. And so first is awareness. And then, of course, taking steps to ensure
06:47 that, you know, you eliminate the bias. But these are the ways in which I think fintechs
06:51 can play a very critical role in the credit space for women.
06:55 I think that's a very important point. You know what they say, algorithms are as smart
06:59 as you teach them to be. Yes. So coming to the regulatory standpoint, this sector, this
07:05 space, financial one, is getting more and more regulatory approvals, more rules are
07:09 coming in. It's diversifying, it's changing all the time. So what shifts do we need at
07:14 a policy level to address the problems of financial inclusion?
07:18 So very good point and cannot over emphasize the role of a regulator. And I think we in
07:24 India have been very fortunate that we have a wonderful forward looking regulator. Even
07:31 things like a Reserve Bank of India Innovation Hub that has been created exclusively for
07:35 fintechs. That's very forward looking. And it does not exist in most geographies. Having
07:41 said that, you know, getting women into the formal financial system and digital technology
07:49 playing a very critical role, we all understand that. But I think we also need to be very
07:53 mindful of the kind of dangers that we expose these women to when they come into the digital
08:00 space, thanks to all the phishing and the various other issues associated with the digital
08:08 space. So consumer protection has to go hand in hand, you know, as a policymaker and they
08:13 are in a position. So while they can play a role in the fair and responsible lending,
08:18 when it's there are three players involved here. One is the end customer. And what is
08:22 relevant for her from a policy point of view, which is around the consumer protection, data
08:25 privacy and things like that. The second is the actual financial service provider. Now
08:30 what is the role that a financial service provider can play, you know, when it comes
08:35 to lending? So are they applying the principles of fair lending in their practice, you know,
08:45 and so on. The third is the regulator themselves, which is gender disaggregated data. You know,
08:52 everybody keeps talking about it. Is data around gender available? The answer is yes,
08:57 of course it is available. But what are we doing with the data? It's almost invisible
09:02 when it comes to actually applying a gender lens, when it comes to looking at data, you
09:08 know, to use it for, you know, the kind of products that you need to be designing, the
09:13 kind of channels that you need to be using and so on and so forth. So how to engender,
09:20 you know, this importance of looking at the right set of data in order to push the gender
09:27 intentionality. I think policy can be, you know, and policy goes through its own evolution.
09:35 It's directive first and then it becomes collaborative. So one of the work that we've recently done
09:39 about a couple of years ago was on the banking correspondent, given the amount of work that
09:44 we have done with public sector banks, you know, close to 12 million women is the number
09:51 that we reached in the last year or so through our work with the public sector bank. And
09:58 one of the realizations were in terms of the women that actually serve these Jandan customers,
10:04 what we call the banking correspondents. And you see the shocking representation of women
10:09 correspondents as an industry is as close to just 8 to 10 percent. 8 to 10 percent serving
10:16 55 percent of Jandan customers. So you know, you get the picture. So how do we ensure that
10:21 we have more women representation in the customers? And who are these women? At the end of the
10:24 day, these banking correspondents are women from the same community that they serve. So
10:28 it also becomes a livelihood opportunity. So we worked with the BC committee to recommend
10:32 that can there be 30 percent women representation in the BC community, etc. So advisory led
10:40 advocacy is the approach that we follow in women's world banking. But it cannot be, you
10:46 know, there's no taking away from the most critical role that policies and policymaking
10:51 has. And so one of the other big initiatives that we at women's world banking also do is
10:57 around leadership and diversity training for regulators. We are probably the only organization
11:01 globally that has an exclusive program for regulators. We've got regulators from more
11:06 than 30, 40 countries participating in our program, which we've tied up with Oxford.
11:11 And the whole idea is how do we identify women in leadership positions in these regulations,
11:16 in these regulators? Yeah. And how do we ensure that there is gender intentionality that's
11:24 built in? But more importantly, how do we teach her leadership skills so that she's
11:28 in a position to influence, you know, what she thinks is right, is the right policy to
11:33 make. But how do we ensure that she actually is able to roll it out? Right. So ability
11:39 to influence. So, you know, leadership and diversity. So these are ways in which policymakers
11:45 and stakeholders like us, you know, can can collaborate to bring about more gender intentionality,
11:53 you know, in everything that we do in the financial inclusion space.
11:58 Yeah. Ma'am, you said one point about gender lens. So your organization, that would be
12:03 my final question as well. Your organization really focuses on gender lens investments.
12:08 At this point, are you planning any new investments in India or any partnerships, perhaps?
12:14 So no, thanks. Yes, we do have a gender lens investing arm, which invests in women led
12:20 and women focused institutions. We operate in multiple countries. We are in the second
12:26 round of fund. To your specific question around, are we looking at India? Obviously, yes. We're
12:33 always looking for opportunities. We have several investments in India already. Some
12:38 of our investing organizations include Ujjivan, Annapurna, Sitara, etc. And so I think we
12:46 will always be looking for opportunities in India. And when the time is right, I think
12:50 there will be, you know, investments made. Yeah.
12:55 Thank you so much for speaking to BQ Prime. I hope you had a great time.
12:58 Thanks and thanks for having me.
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