MEDIA CENTER
PC India News Release

Penny Wise, Pound Wiser

NEW DELHI, INDIA  (9 October 2006) — “My parents don’t have a son. We are two sisters. So this money will help my parents in the future,” says Savita. Although she is just 15 years old, Savita recognizes the importance of saving and holds a joint account with her mother.

But how many of the 330 million young people between the ages of 14 and 24 in India are aware of existing saving programs? Studies have shown that financial illiteracy, especially among adolescent girls, limits their decisionmaking abilities. But if young women are able to exercise control over their financial resources through savings, not only does their self-esteem go up but doing so also contributes toward reversing traditional gender role expectations, says a recent study by the Population Council and the Self Employed Women’s Association (SEWA).

This study will be presented at a two-day conference organized by the Population Council, an international nongovernmental organization, to share new evidence from its research on young people’s situations and needs.

According to Shireen Jejeebhoy, senior program associate at the Population Council, one of the reasons Council researchers have focused on adolescent girls is because girls are particularly vulnerable. Not only do they have fewer opportunities than boys and lesser access to resources, they are socially more isolated. Therefore, there is an urgent need to build opportunities and skills to enable adolescent girls to become self-reliant, she says. The study, which focused on 76 adolescent girls between the ages of 13 and 25 in one urban and two rural locations in Gujarat, has shown that encouraging young girls to save money earned through wages or gifts has helped to build their self-confidence.

According to Shveta Kalyanwala, one of the authors of the study, titled "Spending, saving and borrowing: Perceptions and experiences of girls in Gujarat," the researchers focused on adolescent and young girls who already held savings accounts, jointly or singly in one or more of SEWA’s savings programs. This was done to gain better understanding of the saving patterns of young account holders, the barriers they faced, and the degree of control they exercised in operating their accounts.

One of the main findings is that despite poverty and uncertainty in their lives, there is a strong desire to save among adolescent girls in both rural and urban Gujarat. However, the study, conducted in 2004–2005, also finds that few participated in decisions on how their savings would be utilized primarily because of their financial illiteracy. Parents or husbands appeared to be the main decisionmakers, and the girls in both rural and urban areas had little control over their accounts. “My husband will decide how to use the money. Maybe he will use it for our daughter’s wedding” said Asha, a 22-year-old woman from Banaskantha who holds a rural Mandal account. Meenu, a 21-year-old woman from urban Ahmedabad, knows that her mother, with whom she holds a joint account, has already decided this money will be used for her marriage.

However, many adolescent and young women felt that having their accounts individually held and managed would give them greater control over their savings. “If it is a joint account, then we cannot withdraw money as we wish because the other person will have control over our money. I prefer an individual account. Then I have the freedom to withdraw money whenever I want.” This was the common response of both rural and urban girls when asked which account they preferred to hold if they had a choice.

Among the strategies suggested by the study to make savings an empowering experience for the girls is to sensitize parents to allow their daughters to make financial decisions and operate savings accounts. Equally important is to make processes and mechanisms involved in opening and operating saving accounts and concepts like budgeting, credit, and interest easily understandable. Saving programs also must be designed to make even unlettered account holders comfortable with the banking process so that they are encouraged to make their own decisions.