Financial Inclusion of Female Domestic Workers in India: An Overview

This report delves into the critical issue of financial inclusion for female domestic workers in India. It begins by defining financial inclusion and its importance for women's empowerment, especially in a country where domestic work is a significant, yet often informal, sector. The report highlights the vulnerability of these workers, the lack of legal and social protections, and the challenges they face in accessing financial services and achieving financial literacy. It reviews existing literature, including studies on government initiatives like the Pradhan Mantri Jan Dhan Yojana and the role of organizations like the Reserve Bank of India and SEBI in promoting financial literacy. The report also examines the situation in Maharashtra, a state that has taken some steps towards financial inclusion, but where gaps remain. It concludes by emphasizing the need for financial literacy, access to banking services, and a supportive environment to ensure the financial independence and overall well-being of female domestic workers in India. The report draws on various sources including the World Bank, ILO, and academic research to provide a comprehensive overview of the issue.

Running head: FINANCIAL INCLUSION IN INDIA BASED ON FEMALE DOMESTIC
WORKERS

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FINANCIAL INCLUSION IN INDIA BASED ON FEMALE DOMESTIC WORKERS
Introduction
In order to understand the issue of financial inclusion of female domestic workers in
India, it is important to understand what financial inclusion is at first. The World Bank provides
a simple definition of financial inclusion. According to it, financial inclusion refers to the system
where “individuals and businesses have access to useful and affordable financial products and
services that meet their needs” (Worldbank.org, 2019). The needs include payments,
transactions, savings, payments, insurance and credit that are delivered to them in a “responsible
and sustainable way”. Therefore, it could be understood that the issue of financial inclusion of
female domestic workers in India is quite serious. In India, women empowerment is one of the
greatest challenges and that could only be attained through the education and financial liberation
of women. the female domestic workers who provide continuous help to the rich class people in
most aspect of their lives lag behind in their own life due to lack of financial literacy. Financial
literacy is referred to the individuals possess the knowledge and skills to make effective
decisions about the financial resources they have. Domestic workers are those who “work for
private households often without clear terms of employment, unregistered in any book and
excluded from the scope of labour legislation” (Ilo.org, 2019). The females constitute the highest
percentage of domestic workers across the world. In India, constitute around 4.2 million
populations officially while the unofficial count is as high as 50 million (Ndwm.org, 2019).
These domestic workers are amongst the most vulnerable groups in the country because they
have no legal or social protection. Financial inclusion of these female domestic workers would
ensure that they are financially capable of protecting themselves. Many of these domestic
workers find it difficult to earn a steady income and often have to manage temporary

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FINANCIAL INCLUSION IN INDIA BASED ON FEMALE DOMESTIC WORKERS
unemployment. With financial inclusion, these women would be able to be financially
independent because most women rely on traditional transaction method that creates a burden.
In the views of Demirguc-Kunt, Klapper and Singer (2013), financial inclusion of women
domestic workers is important for the alleviation of poverty, upholding of basic rights and
sustainable development. The author further sheds light on the specific financial needs of the
women as compared to men stating that financial inclusion could help women in saving for their
future, for the proper education of their children and for their own health and the health of their
children. Financial inclusion hence must be focused on the need for women to have financial
literacy, for inclusion in the decision-making process and so on. Financial inclusion could also
help the female domestic workers to reduce poverty and increase growth.
Literature review
As Agarwala and Saha (2018) note, significant rise has been visible within the female
domestic workers circle in India in the recent years. Although there has been significant
development in the recognition of domestic help as an important livelihood, the sector is still
“unorganized, unrecognized and unrewarding” (Agarwala and Saha 2018). The domestic women
workers need financial inclusion to save themselves from the the vicious chain of the
moneylenders, pawnbrokers and chit funds. These women have no other source to manage their
funds and hence, fall prey to thugs and other financial frauds. Their inclusion in banking thus has
a great influence on women empowerment overall. When women domestic workers are
financially included in the country, they could use this opportunity to improve the health and
education of their children. in this way, the financial inclusion of female domestic workers could
help in the overall benefit of the country with more children being educated and literate. The

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Pradhan Mantri Jan Dhan Yojana by the present government was set up to broaden the financial
inclusion of the women (Hindustantimes.com, 2019). The scheme helped millions of women
access banking facilities and regulate the cash flow. Another positive aspect that came out of it
was that the women domestic workers were more eager to access banking. However, the access
to banking facility did not help in the complete financial inclusion of the women domestic
workers but it did provide a stepping-stone from where the women could become financially
included.
To ensure that the women domestic workers are financially included, it is important to
make them financially literate. According to Singh and Kumar (2017), financial literacy
contributes greatly towards making the women domestic workers self-dependent. The Reserve
Bank of India undertook a project that could help in making the women financially literate. The
project titled “Project Financial Literacy” proposes to disseminate information on the functioning
of the bank to the vulnerable groups including the women in rural areas that include the domestic
workers as well. The RBI has also provided a website for facilitating easier access to information
for the common people. Apart from the RBI, the Securities and Exchange Board of India (SEBI)
also made initiatives to increase the financial literacy of the women domestic workers. The
initiatives have helped people to understand financial literacy at the school and college level.
However, there are several barriers in the way of making the women financially literate. First
barrier is limited education. The literacy rate of rural women in India is only around 57%
whereas the urban women have the literacy rate of 79%. Second barrier includes the social and
cultural barrier. In the male dominated world, the women hardly have any place in the social and
cultural sphere. Women, even if they are earning are not allowed to spend the money according

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FINANCIAL INCLUSION IN INDIA BASED ON FEMALE DOMESTIC WORKERS
to their own choice owing to the cultural and social restrictions. Financial and physical barriers
also cause women to stay financially illiterate.
The situation is Maharashtra is similar to the overall situation of the country when it
comes to financial inclusion and financial literacy of female domestic workers. Gupta (2015)
conducted a study on the financial literacy and inclusion of domestic workers in the two regions
of Maharashtra namely Pune and Satara. The study revealed that the domestic workers mainly
women have greatly benefitted from the introduction of the Pradhan Mantri Jan Dhan Yojana.
However, there is still abundance of areas where the government needs to focus on when it
comes to financial literacy and inclusion. The study found that although majority of the women
have good knowledge about the banking system, the bank accounts, types and so on, very little
of them actually use it. Thus, it shows that although the women are financially literate but they
are yet to become completely included in the financial system. Maharashtra comes amongst the
seven states where the government has fixed a minimum wage for the domestic workers and they
have a separate Domestic Workers Welfare Board. The state of Maharashtra has even enacted a
Welfare Act for the female domestic workers and the prevalence of a Mathadi Board where the
domestic workers are required to register. Such initiatives and acts have helped the state of
Maharashtra to be amongst the very few states where financial inclusion of female domestic
workers has been taken seriously.
As given in the National Domestic Workers Movement, it was not easy for the domestic
workers in Maharashtra to have the welfare board function (Ndwm.org, 2019). The workers had
to stage demonstration to demand the Maharashtra Government for the fast functioning of the
Domestic Workers Welfare Board to give provision of social security. This reveals the growing
awareness amongst the domestic workers regarding their rights and freedoms. However, the

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demonstrations did not include anything related to financial inclusion or financial literacy.
However, Agarwala (2013) observes that the Maharashtra government has done quite a lot when
it comes to providing financial and social security to the domestic workers in the state. The
author states that the formation of the Maharashtra Rajya Ghar Kamgar Kruti Samiti itself is an
indicator of the government’s efforts to include the domestic workers within the financial and
social sphere. On the contrary, Garg and Agarwal (2014) have found that the number of account
holders in Maharashtra is only 40%, which indicates that the condition of female domestic
workers in the state in terms of financial inclusion is quite poor. Therefore, although it could be
stated that the Government of Maharashtra has done a lot in the financial inclusion and literacy
of domestic workers, there is still some big gaps to complete because the women are not
completely aware of the importance of banking and its use.
Krenz, Gilbert and Mandayam (2014) further conducted interviews with some domestic
helpers in Mumbai, Maharashtra to understand the potential of the “credit-plus” model to help
women empowerment through financial inclusion. The author found, “emergent themes of
empowerment were enhanced socio-emotional wellbeing increased economic assets, and
improved household gender equity”. This further reveals that the financial inclusion of women
domestic workers is crucial and this requires the women to become financially literate. The
Maharashtra State of India is one such state that gives due attention to the domestic workers and
their financial stability. However, with the absence of a national legislation on financial inclusion
of domestic workers, it has become difficult for the state government to fully recognize the
domestic workers’ financial inclusion.

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References:
Agarwala, R. and Saha, S., 2018. The employment relationship and movement strategies among
domestic workers in India. Critical Sociology, 44(7-8), pp.1207-1223.
Agarwala, R., 2013. Inventory of Informal Worker Organizations: India. Institute for Research
on Labor and Employment. Los Angeles, CA: University of California. http://www. irle. ucla.
edu/research/documents/Agarwala-IndiaInventoryDec2013. pdf.
Demirguc-Kunt, A., Klapper, L. and Singer, D., 2013. Financial inclusion and legal
discrimination against women: evidence from developing countries. The World Bank.
Garg, S. and Agarwal, P., 2014. Financial inclusion in India–a Review of initiatives and
achievements. IOSR Journal of Business and Management, 16(6), pp.52-61.
Gupta, V., 2015. Pradhan Mantri Jan-Dhan Yojana: An Effort towards Financial Inclusion. IUP
Journal of Bank Management, 14(2), p.49.
Hindustantimes.com (2019). More financial inclusion means more empowerment for women.
[online] https://www.hindustantimes.com/. Available at:
https://www.hindustantimes.com/columns/more-financial-inclusion-means-more-empowerment-
for-women/story-Dn77CQUhyq4mlwlnMEGN9M.html [Accessed 20 May 2019].
Ilo.org (2019). Who are domestic workers ?. [online] Ilo.org. Available at:
https://www.ilo.org/global/docs/WCMS_209773/lang--en/index.htm [Accessed 20 May 2019].
Krenz, K., Gilbert, D.J. and Mandayam, G., 2014. Exploring women’s empowerment through
“Credit-Plus” microfinance in India. Affilia, 29(3), pp.310-325.

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Ndwm.org (2019). Domestic Workers – NDWM. [online] Ndwm.org. Available at:
http://ndwm.org/domestic-workers/ [Accessed 20 May 2019].
Singh, C. and Kumar, R., 2017. Financial literacy among women–Indian scenario. Universal
Journal of Accounting and Finance, 5(2), pp.46-53.
Worldbank.org (2019). Overview. [online] World Bank. Available at:
https://www.worldbank.org/en/topic/financialinclusion/overview [Accessed 20 May 2019].