Why there are so few women in banking

Source: The post is based on the article “Why there are so few women in banking” published in Business Standard on 9^th October 2023.

Syllabus: GS 2 – Issues associated with Women

Relevance: Issues with women’s representation in banking sector in India

News: The article discusses the current state of women’s representation in India, with a specific focus on the banking sector.

What are some of the facts related to women representation?

India: In the World Economic Forum’s 2023 Global Gender Gap report, India secured the 127th position out of 146 countries in terms of gender parity.

-According to the ILO, in India, as of 2021, 82 percent of women worked in the informal economy, and the gender pay gap stands at 27 percent in 2023.

-The Reserve Bank of India (RBI) has found that there is just 24 percent representation of women across all scheduled commercial banks.

-As per the RBI Deputy Governor, India’s women workforce participation is among the lowest in the world, and it is declining.

-As per a study, India has the potential to boost its GDP to $770 billion by 2025 if it provides equal opportunities to women.

Globally: Women now hold 32.4% of senior management positions in mid-market businesses globally, which is a rise of just 1 percentage point in the past one year. According to the WEF, it will take 132 years to close the gender gap globally.

Moreover, in India’s software sector, women have made significant progress, with a 77 percent increase in female employees compared to a 62 percent rise in male employees. However, the same level of progress is not seen in the banking sector.

How have women progressed in the banking sector in India?

After Banks’ Nationalization: After nationalization, it took over three decades for a woman to become the CEO of a commercial bank in India.

Tarjani Vakil achieved this milestone in 1996 at the Export-Import Bank of India, while at the RBI, Kishori J Udeshi became the first woman deputy governor in June 2003.

In the Last Decade: In the last decade, the presence of women in India’s banking sector has increased.

For example, in 2010, women constituted 17% of employees in public sector banks (PSBs), with just 2.7% in executive roles and by 2021, the proportion of women employees in PSBs rose to 27%.

However, there has been minimal change in the number of women working in private and foreign banks.

Gender Balance Index 2023: As per the index, gender imbalance is a concern within the RBI as well. This index reveals that the Asia-Pacific region, particularly in financial institutions, faces significant challenges in achieving gender balance.

As per the index, the region has the second-lowest representation of women in leadership positions in financial institutions globally.

What can be the way ahead?

To attain gender parity, companies should prioritize flexible working options, including extended maternity leave and childcare support, along with hybrid and remote work arrangements.

Such flexibility has been proven to boost women’s presence in senior management.

Furthermore, the rising focus on environmental, social, and governance (ESG) norms is encouraging companies to build diverse leadership teams, as diversity is becoming a key factor to secure capital.