Women Have Bank Accounts but Struggle to Build Wealth: New Report Reveals Gap

Despite significant strides in financial inclusion, a large number of women in India are still struggling to translate access to financial services into long-term financial prosperity. A recent study by Lxme in collaboration with EY India highlights this paradox, revealing that while women have gained unprecedented access to banking systems, their participation in wealth-building activities remains limited.

According to the report, India scored 28.1 out of 100 on the Women’s Financial Prosperity Index (WFPI). The low score underscores persistent structural barriers that prevent women from fully participating in financial markets and accumulating wealth over time.

Although over 89% of Indian women now hold bank accounts, the report points out that these accounts are largely used for basic financial transactions rather than investments, retirement planning, or long-term asset creation.

Understanding the Women’s Financial Prosperity Index

What the WFPI Measures

The Women’s Financial Prosperity Index (WFPI) is designed to measure not only access to financial services but also how effectively women can use these services to build financial security and wealth.

Four Key Dimensions of the Women’s Financial Prosperity Index

The index evaluates women’s financial progress across four major dimensions:

1. Access

Availability of financial services such as bank accounts, credit, and insurance.

2. Inclusion

Participation in formal financial systems including savings schemes, insurance products, and investment instruments.

3. Agency

Women’s ability to make independent financial decisions.

4. Outcomes

Actual wealth creation, financial security, and asset accumulation.

India’s score of 28.1 out of 100 indicates that although access to banking services has improved significantly, progress in the other dimensions remains limited.

Financial Inclusion Has Expanded Rapidly

Bank Account Ownership Reaches New Highs

India has seen one of the fastest expansions in financial inclusion globally over the past decade. Government initiatives, digital banking innovations, and financial awareness programmes have played an important role in expanding banking access.

The report notes that more than 89% of Indian women now hold bank accounts, a remarkable improvement compared to previous decades when a large portion of women remained outside the formal banking system.

However, access alone does not automatically translate into wealth generation.

Limited Use of Accounts for Wealth Creation

Most women primarily use their bank accounts for:

• Cash withdrawals

• Receiving government benefits

• Basic transactions

Very few use them for investments, long-term savings, or financial planning, which are key drivers of financial prosperity.

Low Participation in Investment Markets

Gender Gap in Mutual Fund and Equity Investments

One of the most striking findings of the report is the significant gender gap in investment participation.

According to the study:

• Only 8.6% of Indian women invest in mutual funds or equities

• In comparison, 22.3% of men participate in these investments

This gap highlights the limited participation of women in capital markets, which are critical for long-term wealth creation.

Pension and Retirement Planning Gap

The disparity also extends to retirement planning.

The report reveals that:

• Just 14.2% of women hold pension or provident fund accounts

• 32.8% of men have such accounts

This indicates that women are less financially prepared for retirement, which could lead to greater financial vulnerability later in life.

Women Start Investing Later and With Smaller Amounts

Delayed Entry into Investments

The study also found that women typically begin investing later than men.

On average, women start investing around five years later than men, which significantly reduces their ability to benefit from compounding returns over the long term.

Smaller Initial Investments

Women’s first investments are also generally smaller.

According to the report, women’s initial investments are almost half the size of men’s first investments, further slowing their wealth accumulation journey.

Over time, this gap compounds and results in significantly lower financial assets.

Income Gap and Labour Participation Challenges

Persistent Gender Pay Gap

Income inequality remains another major barrier to financial prosperity.

The report states that women earn ₹73 for every ₹100 earned by men, reflecting a persistent gender pay gap across sectors.

Lower earnings naturally limit the amount women can allocate toward savings and investments.

Low Workforce Participation

Labour force participation among women is also significantly lower.

• Only 41.7% of working-age women participate in the labour force

• 78.8% of men are part of the workforce

A large number of women work in informal sectors where income is irregular and unstable, making consistent investment difficult.

Financial Literacy Remains a Major Barrier

Limited Awareness of Financial Products

Financial literacy is another key challenge identified in the report.

Only 21% of Indian women are financially literate, meaning many lack the knowledge required to:

• plan long-term investments

• diversify financial portfolios

• manage retirement savings

• understand financial risks

Without financial knowledge, even women who have access to banking systems may hesitate to participate in formal investment markets.

The Economic Opportunity of Empowering Women

Potential ₹40 Lakh Crore Economic Impact

Despite the challenges, the report highlights the enormous economic potential of improving women’s financial participation.

It estimates that enabling women to participate more actively in long-term financial investments could create a ₹40 lakh crore GDP-equivalent opportunity.

This potential growth could be driven by:

• higher domestic savings

• deeper capital market participation

• increased long-term investments

Greater financial empowerment of women could therefore significantly boost India’s economic growth.

Need for Gender-Sensitive Financial Products

Rethinking Financial Systems

The report emphasizes that improving women’s financial prosperity requires more than expanding bank accounts.

Financial institutions, policymakers, and fintech platforms must develop systems that better reflect:

• women’s income patterns

• career breaks due to caregiving responsibilities

• longer life expectancy

• smaller but more frequent investments

Customized financial products, simplified investment tools, and targeted financial education could help bridge the current gap.

Role of Digital Platforms and Fintech

Digital financial platforms are emerging as important tools in promoting financial inclusion and literacy among women.

Fintech solutions can provide:

• micro-investment platforms

• simplified savings tools

• digital financial education

• personalized financial planning services

These tools can help women gradually move from basic banking access to meaningful wealth creation.

Conclusion

The findings from the report by Lxme and EY India highlight a crucial reality: while India has made remarkable progress in expanding financial access for women, true financial prosperity remains out of reach for many. With over 89% of women now holding bank accounts, the country has laid a strong foundation for financial inclusion. However, the low Women’s Financial Prosperity Index score of 28.1 reveals that access alone does not ensure financial empowerment.

Significant gaps in investment participation, retirement planning, income levels, workforce participation, and financial literacy continue to hold women back from building long-term wealth. Bridging this gap will require coordinated efforts from policymakers, financial institutions, and fintech innovators to design inclusive financial systems that reflect women’s realities.

If these barriers are addressed effectively, empowering women financially could unlock a ₹40 lakh crore economic opportunity, strengthening not only women’s financial security but also India’s broader economic growth.