BackBudget 2013: First women-only bank to come up in October
Government to provide initial capital of `1,000 crore to get the venture going
Premium(Ramesh Pathania/Mint)
Mumbai/Ahmedabad: India will start its first bank exclusively for women in the next eight months.
The government, which will provide initial capital of ₹ 1,000 crore to get the venture going, expects the bank to open for business in October after all necessary approvals from Reserve Bank of India (RBI) are in place, finance minister P. Chidambaram said on Thursday.
“Can we have a bank that lends mostly to women and women-run businesses, that supports women self-help groups (SHGs) and women’s livelihood, that employs predominantly women, and that addresses gender-related aspects of empowerment and financial inclusion? I think we can," Chidambaram said in his budget speech.
Some observers saw the concept as a gimmick aimed at the women ahead of the general election due in 2014. The Congress party has been wooing women voters besides the young and the rural masses, who helped it win back-to-back terms in office in 2004 and 2009. India already has in place an adequate financial services infrastructure for women, they said.
“If gender discrimination by the existing banks is the issue government is trying to acknowledge, creation of a special women’s bank is not the right solution," said Vijay Mahajan, the founder of India’s oldest livelihood promotion group, Basix.
“The answer for discrimination is to realize its root causes, which is the fact that women in India have no title rights over property, hence no say in financial matters. Most of them don’t participate in the formal economy," Mahajan said. According to Mahajan, India has about 60-70 urban cooperative banks dedicated to women borrowers. “But they haven’t received the desired attention from the government. Not one of them has reached a size of ₹ 100 crore," he said.
There have been cooperative organizations run exclusively by women such as the Ahmedabad-based Shri Mahila Sewa Sahakari Bank Ltd (since 1974) and Mann Deshi Mahila Sahakari Bank Ltd (since 1997).
To be sure, the idea has its backers. Meera Sanyal, country executive, RBS India (the Indian unit of Royal Bank of Scotland Plc.), said an exclusive bank in India would enhance women’s empowerment. “Though we do have cooperative banks and scheduled commercial banks, they have competing priorities and targets to meet. The needs of women are not their focus area. Sceptics may dismiss this idea as populist, but there is a real need for empowering our women," Sanyal said.
Even internationally, there aren’t too many institutions that operate exclusively for women. One such example is First Women Bank Ltd of Pakistan, set up by the late Pakistan prime minister Benazir Bhutto in 1989 to meet the banking needs of female entrepreneurs. Tanzania has the Tanzania Women’s Bank Ltd set up in 2007.
Chidambaram said the government decided to set up a women-only bank because of a perception that women do not get sufficient attention from financial institutions, including public sector undertakings (PSUs). “Clearly there is a bias to lend to men, rather than women. A PSU bank for women will be a good institution lending mostly to women. There will be predominantly women employees, but there will be some men too who will find employment here. This will address issues of SHGs and address gender biases," Chidambaram told reporters.
The government’s plan to float a women-only bank coincides with a sharp deterioration in the credit culture of the SHG model in Indian villages. SHGs have acted as vehicles for the financial empowerment of women in the last two decades. SHGs are groups of about 10 women borrowers; they get bank loans that are distributed among members of the group. Thursday’s announcement came barely a week after RBI announced the final licensing norms for a new set of private banks.
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