Despite a high degree of financial inclusion and digital literacy, a major barrier towards digital financial inclusion in the Lakshadweep islands is the poor Internet connectivity, according to an RBI funded research study.
Respondents reported apprehensions about digital transaction failures, which often discouraged them from using Internet and mobile banking, as per the field study conducted by the Centre for Rural Management (CRM), Kerala, in all the ten inhabited islands in Lakshadweep.
Dweepshrees and Bank Sakhis
“Strengthening the mobile network connectivity and ensuring high-speed Internet connectivity were key to expanding digital financial inclusion on the islands. The SHGs (self-help groups) in Lakshadweep, popularly known as Dweepshrees (inspired by Kerala’s Kudumbashree) can also be used to transform Lakshadweep into a digitally inclusive society, particularly for women,” the study said.
The CRM team suggested that “Bank Sakhi” (Women Banker Friend) concept can be introduced in Lakshadweep and members of SHGs can be actively recruited as Bank Sakhis.
“Establishing banks in remote areas and ensuring their smooth operation for enhancing inclusion is a challenge, not just in India but globally. However, Lakshadweep sets a good example in this regard, particularly in terms of inculcating savings and payment habits among the inhabitants, although the geography of these islands and the high levels of literacy may make them a unique case for study,” they said.
The team underscored that despite the limited real economic activity on the islands in the form of fisheries and tourism, the financial sector on the islands was well-entrenched primarily owing to banks.
The data collected from the islands revealed that all respondents had bank accounts owned either jointly or individually.
A gender divide, along banking lines
“Most respondents used their savings bank accounts due to the trust that their money will be safe...There was a considerable difference between men and women regarding banking habits, including the decision to operate their accounts on their own even though there was no gender gap in ownership of accounts. While 91 per cent of the men operated their accounts by themselves, the corresponding figure among women was 71 per cent. This was mainly due to time and travel constraints for women,” the study said.
The authors of the study observed that majority of men and women in the islands had a mobile phone. The research team observed at least three smartphone users each in every selected household in the islands. More than 70 per cent of the respondents were reported to have used Internet and computers at some point in their lives.
ATMs
About 90 per cent of the respondents in the islands had ATM cards, with 95 per cent coverage for men and 85 per cent for women. About 80 per cent of the respondents in the islands used ATM cards; the percentage of usage was 91 per cent for men and 72 per cent for women. Women often gave their cards to family members to operate.