Category : COVER STORY
Author : Shayma S

The declining economy faced another body blow in 2020 with the COVID-19 pandemic and has struggled to revive itself ever since. The decline of the welfare state and the retreat of the government in favour of allowing for private players to buy in almost all sectors of the economy has meant that the crushing weight of the blow was shouldered not primarily by the state but directly by the people; who, apart from struggling for life and death, also had to deal with loss of livelihood, debt, questions of survival and dignity. As images of unknown citizens being burned in mass pyres and buried in over-full graveyards began to sink in, another reality awaited for many of the survivors left behind, particularly women – to build a life anew, sometimes without their breadwinner husbands, sometimes after losing their own jobs and more often than not, all of it simultaneously.

Most women in India, apart from lacking financial literacy, also lack the basic knowledge of the essential financial and legal paperwork of their own homes – land deeds, insurance papers, and so on. This makes them extremely vulnerable to acquaintances and even relatives who may seek to prey on this lack of information. Now, with the added burden of death certificates, complex state-certified compensation and medical paperwork, the mountain of ignorance is higher than ever. Financial literacy is a gaping black hole for most women in India, even in urban households with a higher degree of literacy. Not only is there little knowledge about many financial aspects, this leads to vulnerability on other fronts – as this study in The Hindu shows, only 33% women are confident in how to invest their money, while financial dependence also leaves them locked into situations of domestic abuse, unable to step out. They also find it difficult to understand their rights of inheritance, ownership and such aspects, and realize much later that what is owed to them has been robbed openly. Forget saving & investing, even basic things like bank transactions or the possession of an ATM card is unknown to many girls. Different communities are also affected disparately by this imbalance, with the Sachar Committee observing the lack of bank credit extended to Muslims.

This is alongside the gender pay gap, as measured by the Gender Gap Index 2020, according to which India is at an embarrassing 112th position.

This is alongside the gender pay gap, as measured by the Gender Gap Index 2020, according to which India is at an embarrassing 112th position

Along with, struggling individuals and already-deprived communities are faced with a very exploitative financial system which is built on the premise of the ‘rich get richer’ and the poor face an abyss of misinformation, exploitation and next to nothing in the name of assets and generational wealth. They find themselves teetering over a rock and a hard place – abject poverty or the vulture-like claws of high interest, greedy moneylenders and an endless cycle of loans and debt. But in this darkness, there is some light in the form of those community organizations, self-help groups, cooperative systems and individuals who try to offer ways for people to not only earn, but also save, invest and grow ethically, rather than with a narrow vision.

A Fistful of Rice

It is well-known that women are expert savers, managers and organizers within the domestic sphere. Last year, I heard an interesting anecdote about a woman who was cooking rice and received the unfortunate news of her father’s passing. In haste, she begins to go to her maternal home, crossing fields and roads as she does so. Suddenly, she spots something – a semi-cooked grain of rice stuck in her bangle. In this story, the grief-stricken woman turns back to her home and returns the wayward grain of rice back to the vessel, for the fear of it being wasted. The moral is obvious, but the story perhaps would resonate with many women. Rice, the ubiquitous staple for a large percentage of India’s population, finds its way in many such stories about saving & spending, in a community-oriented fashion. Many women in communities across the country, from the Thangkul Nagas to villages in Odisha’s Bolangir district have had a tradition of putting away one fistful of rice or any similar non-perishable commodity at regular frequencies (such as each meal) for the always-looming ‘rainy day’ to make a grain bank. Similar practices are in place in other countries and cultures, such as a program in Bangladesh called ‘Musti Chale Unnayan’.

The pandemic has seen the rise of many women-led enterprises & initiatives beyond the limited vision of participating in the corporate sector. Many home businesses, online stores and unique initiatives, ranging from home-cooked food to fabric sales have flourished. While some of this came up as a way to supplement lost income, others found ways to do community-oriented work in the social sector. This has also made women learn about money ‘on-the-job’, on a trial and error basis. So, women have always saved fistfuls of rice, both literally and metaphorically. But there are also women who have helped others in times of difficulty. As Firdouse Khan, Joint Secretary of Forward Trust, Bangalore told Aura, she started helping women with micro-finance & saving money over five years ago when she realised how women were taking loans and suffering as a result. One woman she knew took a loan worth Rs 20,000 and ended up paying Rs 38,000 as interest, that too in weekly instalments. Initially, Khan merely advised her not to indulge in such interest-based loans but then realized that while advice was free, it would only really help if she offered an alternative to it. This search for alternative ways to save has flourished in many parts of the country, with small interest-free microfinance cooperatives that sprung up in states like Maharashtra, Karnataka, Kerala, Tamil Nadu etc. and at the national level as well. Although not formally regulated under the RBI because they are seen as incompatible with the interest-based banking that dominates, they are governed by The Multi-State Co-operative Societies Act, 2002 and state-level Cooperative Societies Act, 1965.

Alternative Financial Systems

Islamic microfinance is one of the fastest growing industries in the world, as Samoon Safiullah, a scholar of Islamic finance, notes in his study on the empowerment of women through this medium. Citing the growing number of women entrepreneurs and small businesses in countries like Indonesia and Malaysia where such enterprises are particularly popular, Safiullah states that “Islamic microfinance has an important influence on economic inclusion, access to schooling, access to health care, and women’s rights.” (2021, p 10). Islamic microfinance is also not new to the Indian subcontinent, with Huma Mahmood, Rusni Hassan and Syed Ahmed Salman (2020) tracing it back to Anjuman Islahul Muslemeen in 1918 in Bhopal. Islamic finance, rather than an interest-based obligation, is based on sharing of both rewards and losses under a pre-arranged contract, and promotes an ethical system based on transparency, full awareness between buyer and seller, and prohibits making money out of money without any trade or risk involved. This inherently prohibits interest-based finance. High interest rates, ‘easy’ loan apps, recovery agents – all have been well-known to exert extreme pressure and even cause suicides in India. The glut of ‘Equated Monthly Installments’ also known colloquially as ‘Easy’ Monthly Installments have a similar story. Their ‘easy’ nature draws people into a trap of spending beyond their means to spend on things they do not need. Thus, interest-free cooperative societies, informal ways of ethical saving and Islamic finance all pave the way for a possibility of an alternative and ethical way of saving, particularly for women in our country, irrespective of religion or belief.

What are women saving for, and what are they spending on? As Sajida, a journalist from Mangalore told us, it depends. There are women who are not aware of the importance of their children’s education and so, focus on saving only for their weddings. But there are many others who are now realizing that education is a must and has to be planned for, right from the start. Maryam Shaheera, an educator and counsellor in Mangalore says that such funds are also used for smaller expenses such as school fees, new clothes during festivals and home requirements. With COVID-19, another major issue is that even the rich do not have much savings left over each month. But systematic saving and budgeting allows for micro-amounts to nevertheless be set aside if practically thought out in advance.

Of course, microfinance is not without its problems & issues, and there have been several debates about how commercial microfinance can trap investors even faster due to the false sense of security of only having small loans on hand. Interest-based microfinance preys on this illusion to replicate the problems in large commercial banks at a smaller scale, to the point that BBC in 2010 called it a ‘micro-finance suicide epidemic’. Interest free microfinance, however, ensures that the deadly snare of the almost permanent debt trap is far less present, and that a society of investors develops rather than the current culture of borrowers and those who chase after them to repay heavy loans. Studies on Sanghamam Multi State Cooperative Credit Society in Kerala, Islami Bank Bangladesh, and more general studies on the use of such cooperative societies by women have revealed not only a deepening of financial literacy but empowerment on personal, economic and familial levels. But such banks are not limited to Muslims, even if they are primarily designed keeping their needs in mind. As Shaziya, an accountant who has been working in Udupi’s Islamic Welfare Society for the past nine years, an interest-free institution says, this is the reason that it’s not just Muslims who are turning to interest-free systems. While Muslims are prohibited from indulging in interest-based finance, non-Muslims, particularly women, are realizing the many problems of commercial interest-based finance and turning to such cooperative societies. Visits to such cooperative societies reveal that it is often women who come to make their deposits, keep their gold for loans and occasionally, to withdraw the money.

The debt-trap in interest-based finance, Shaheera says, can be compared to the ‘Abhimanyu Chakravyuh’, an inescapable trap that even literally can result in the loss of life. We know about the many cases of suicides due to debt, whether it is that of farmers in Maharashtra or of even middle-class men who could not afford to pay for their children’s education. As Shaheera recalls, one of her friends mortgaged her house for a debt of Rs 20,000 and for a period of 3 years, they struggled to pay it back. When she checked on the details, it was found that they had paid Rs 19,000 as interest on a loan of Rs 20,000. According to her, microfinance helps people derive solutions from their own money, on their own terms.

Such saving is not always done in formal settings. A system that Safoora, a 65 year old home-maker from Udupi has followed, involves her relatives, children and acquaintances putting small amounts into a local interest-free cooperative society, but she also simultaneously maintains a family trust where her children put in small amounts of money each month according to their capabilities. This fund is then used for relatives in need and other people with immediate emergencies. This way, family members do not need to depend on exorbitant loans in times of urgency. Money slips through hands rather easily usually, but these women observe that once it enters such a system, people do not feel the temptation to withdraw it for unnecessary expense.

Ethical Saving, not Hoarding

Hoarding and non-payment of zakat on gold is a serious issue of concern in the Muslim community. While gold is carefully collected, as it is in many other cultures, the responsibility of zakat is not heeded to with the same enthusiasm. Thus, a conversation on the difference between saving mindfully and hoarding selfishly is necessary. Circulation of wealth is necessary for the amelioration of inequality from society and zakat (obligatory giving of 2.5% of one’s annual wealth) and sadaqah (voluntary charity) is at the heart of this issue. Gold, while a safety net for many working class and middle class families, has to be saved ethically and not merely for the growth of one’s future generations without any societal benefit.

As Firdouse Khan explains, “The importance of financial literacy is immense, because whatever they [women] have, they should be able to manage within it: daily needs, rent, bills, and children’s education. But if men and women don’t share the responsibility of financial planning, it doesn’t work. If women learn even a little bit about money, they share the knowledge with their friends and in their communities. Many people spend unnecessary money on unnecessary provisions or expensive commutes and don’t have proper budgeting. So if they get clarity on how much to spend and how much to save, they can adjust their budget in the subsequent months.”

At the end of the day, banking and saving is but a small avenue of learning in the larger dictionary of financial literacy for women. What we do with the money we have is far more important than having it in the first place. A little goes a long way – for example, if families begin to prioritize saving for their daughters’ education rather than merely their marriages; or emphasize on regular charity rather than unnecessary expense in the name of ‘what will people think if we don’t spend on…’, a lot can change from within the home itself. The directions of the Qur’an and the life of Prophet Muhammad (peace be upon him) are testament to the fact that neither hoarding nor excessive indulgence is permissible for the believer.

As Allah swt warns, “And there are those who amass gold and silver and do not spend it in the Way of Allah. Announce to them the tidings of a painful chastisement.”

As Allah swt warns, “And there are those who amass gold and silver and do not spend it in the Way of Allah. Announce to them the tidings of a painful chastisement.” (9:34).
An ethical financial system would not celebrate the fact that more billionaires are found in India now than there were the previous year, or how the size of a celebrity’s bungalow can fit X football fields. Instead, as Ibn Abbas reported, The Prophet, peace and blessings be upon him, said, “He is not a believer whose stomach is filled while the neighbour to his side goes hungry.” In our times, there are many hungry stomachs that are unfilled and many other dark statistics that cloud our country’s present and future. The urgent demand is to envision a system that can answer these demands on a broad-based, societal and national level.


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