1. Home
  2. Current Affairs
  3. Current News
  4. IRDAI Issues Guidelines for Women-Centric Distribution Channel 'Bima Vahaks'

IRDAI Issues Guidelines for Women-Centric Distribution Channel 'Bima Vahaks'

  • 10 Oct 2023

On 9th October, 2023, the Insurance Regulatory and Development Authority of India (IRDAI) released guidelines for 'Bima Vahaks,' a dedicated distribution channel focused on women, with the aim of improving insurance inclusion, especially in rural areas.

Key Points

  • Insurance for All Goal: Bima Vahaks are part of IRDAI's strategy to achieve the 'Insurance for All' goal.
  • They are expected to play a vital role in promoting 'Bima Vistaar,' affordable and comprehensive insurance coverage.
  • Effective Date: The guidelines will come into effect when 'Bima Vistaar,' a comprehensive insurance product, is launched in the future.
  • Role of Bima Vahaks: Both individual and corporate Bima Vahaks will be equipped with handheld electronic communication devices integrated into insurers' electronic platforms.
  • They will sell and service 'Bima Vistaar' and other specified insurance products.
  • Bima Vahaks are not allowed to collect fees or charges from policyholders, except for insurance premiums.
  • Operational Standards: The Life Insurance Council and General Insurance Council will jointly establish operational and conduct standards for Bima Vahaks.
  • These standards will cover educational requirements, commission structures, training, appointment terms, database maintenance, data confidentiality, and compliance.
  • Coverage Expansion: Insurers will need to align with the standards set by the councils and have a Board-approved policy on Bima Vahaks.
  • They must engage individual and corporate Bima Vahaks with a focus on gradually covering every Gram Panchayat (village administrative unit).
  • Bima Vahaks should be deployed in each Gram Panchayat by December 31, 2024.
  • Outreach and Responsibilities: Bima Vahaks will contribute to raising insurance awareness in villages.
  • Their responsibilities may include assisting with proposal forms, facilitating KYC processes, issuing insurance policies, providing support for policy and claims-related services, and aiding in claims settlements.

Women & Financial Inclusion Linkage

Building Financial Resilience

  • Women often serve as primary decision-makers for spending and savings in low-income households.
  • Their commitment and discipline in saving are typically higher than that of men.
  • Research indicates that women, when given the opportunity, save and thereby build financial resilience.
  • Targeting women economically benefits banks and contributes to social welfare.

Increasing Social Capital

  • Women's engagement with financial institutions and their access to work and credit can enhance their social capital.
  • Empowering 230 million women Jan Dhan customers financially has the potential to uplift 920 million lives within average-sized families.

Women’s Empowerment and Poverty Reduction

  • Providing low-income women with effective and affordable financial tools for saving, borrowing, payments, and risk management is crucial for women's empowerment and poverty reduction.

Gender Gap in Financial Inclusion

  • According to the 2017 Global Findex database, 83% of males above 15 years of age in India held accounts at financial institutions in 2017, compared to 77% of females.
  • Socio-economic factors, such as greater availability of mobile handsets and internet data among men, contribute to this gap.

Gender-Based Barriers to Financial Inclusion

  • Demand Side Barriers:
    • Lack of bargaining power within the household.
    • Reduced mobility due to time constraints or social norms.
    • Account opening requirements disadvantaging women.
    • Concentration in lower-paying economic activities.
    • Absence of gender-specific policies and practices in product design and marketing.
    • Competing demands on women's time related to unpaid domestic work.
  • Supply Side Barriers:
    • Inappropriate distribution channels.
    • Legal barriers to owning and inheriting property and other collateral.
    • Lack of assets for collateral.
    • Lower rates of digital inclusion.
    • Absence of gender-inclusive credit reporting systems.
  • Legal & Regulatory Barriers:
    • Legal and regulatory obstacles related to property ownership and inheritance.
    • Lack of gender-inclusive policies and practices.
    • Challenges in obtaining formal identification.

Schemes for Financial Inclusion of Women in India

  • Pradhan Mantri Jan Dhan Yojana (PMJDY): Launched in 2014, this is one of the largest financial inclusion programs globally. It aims to provide universal access to banking facilities with a special focus on women. Under this scheme, women can open zero-balance savings accounts and get access to various financial services.
  • Stand-Up India: This scheme, launched in 2016, promotes entrepreneurship among women and marginalized communities by providing loans for starting greenfield enterprises in manufacturing, trading, or the services sector.
  • MUDRA Yojana: Under the Micro Units Development and Refinance Agency (MUDRA) Yojana, women can avail loans up to a certain limit for starting or expanding small businesses. MUDRA offers three categories of loans: Shishu (up to Rs. 50,000), Kishore (Rs. 50,000 to Rs. 5 lakh), and Tarun (Rs. 5 lakh to Rs. 10 lakh).
  • Beti Bachao, Beti Padhao (BBBP): While not directly a financial inclusion scheme, BBBP promotes the importance of educating and empowering girls, which indirectly contributes to their financial inclusion and economic empowerment.
  • Sukanya Samriddhi Yojana: This savings scheme, launched under the "Beti Bachao, Beti Padhao" campaign, allows parents to save money for the future education and marriage expenses of their girl child. It offers tax benefits and an attractive interest rate.
  • Mahila e-Haat: It is an online marketing platform for women entrepreneurs, where they can showcase their products and reach a wider audience. This initiative encourages women's economic empowerment and financial inclusion.
  • National Rural Livelihoods Mission (NRLM): NRLM, also known as Aajeevika, aims to mobilize women into self-help groups (SHGs) and provides them with access to micro-credit and livelihood opportunities.
  • Stree Shakti Package: Offered by various banks, this package includes benefits such as lower interest rates on loans, special credit facilities, and fee concessions for women entrepreneurs.
  • Rashtriya Mahila Kosh (RMK): RMK provides micro-credit to poor women for income-generating activities. It focuses on promoting self-employment and entrepreneurship among women.
  • STEP (Support to Training and Employment Program for Women): This program by the Ministry of Women and Child Development aims to provide skills training and employment opportunities to women, thus enhancing their financial independence.