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The bhartiya mahila “vote” bank!

Last Updated: Wednesday, November 20, 2013 - 14:11

Pawan Kumar

As I walked into an ever-so-crowded branch of a nationalised bank in Faridabad, I was greeted by the familiar sight of mêlée involving people who were trying to get their work done. As I made myself comfortable on a vacant chair which lay near an isolated corner, I overheard murmurs of what sounded like a female voice cursing something or someone. Curious to know if I was the subject of the curse, I turned towards the direction of the voice. And there she was! A woman in her mid-40s, draped in a smart saree, curious but cautious, was trying to find something in her purse while continually ranting out incoherent murmurs, being totally ignorant of her surroundings.

Out of curiosity, I tried to strike a conversation with her. I asked what was troubling her. What she told me is a story that reflects our approach towards women and women entrepreneurs.

I was told that almost three months back she had submitted her proposal of running a small business by setting up a small garment sewing unit in the city. She told me that the bank’s high level officers appreciated and agreed to the proposal but no disbursement has been made so far. Reason - the branch manager doubts if a woman entrepreneur would be successful enough. Probably that is why, the bank was sitting on her proposal and she had no idea when it would be passed.

To my mind it all sounded very familiar. It looked like a clear case of our saree-shy banks, doubting women as entrepreneurs. Similar double standards when it comes to getting policies on their feet. Probably that is why, no public sector bank can boast of meeting the five percent stipulated lending target to women entrepreneurs. It is a well-known secret that a bank manager is the “mai-baap”, who has celestial powers of approving or rejecting anything, sometimes even after the project or proposal has been approved by senior officers in the same bank. She was hoping that her loan would be passed, probably through divine intervention by the branch manager. More importantly, she sounded optimistic that things would become easier for women like her with the launch of all-women bank in the country.

Can this happen? Is a bank for women really the remedy for all that is wrong with the banking sector’s approach towards women? If a country does not give respect and sufficient space to women, then inclusive growth and overall economic development will remain a pipe dream.

The incident is yet more significant as the government is patting its back on the country’s first all-women bank in Mumbai amidst much fanfare and hype. A bank by women and for women will meet their financial needs! Aptly named Bhartiya Mahila Bank, it promises to go where no public sector bank has gone before. Though I wish the bank well and hope it delivers on some of the promised dreams, I am sceptical as to how it will turn our mentality towards women entrepreneurs.

The bank aims to have 25 branches by the end of this fiscal and 75 branches every year after that. The bank would focus on the hugely untapped women entrepreneurs segment, primarily targeting small and medium enterprises. It is slated to give 60% of all loans to women entrepreneurs or projects which are women-specific. Interestingly, deposits will be gender-neutral but lending will be predominantly for women.

The concept of an all-women bank is not new or unheard of. Two countries which already have banks exclusively for women are Pakistan and Tanzania. I don’t know whether P Chidambaram is quite impressed with Pakistan as a state but he seems to be impressed with the First Women’s Bank of Pakistan, which was established in 1989 just after Benazir Bhutto became the Prime Minister. The purpose of the bank was to give loans to small-scale ventures by women entrepreneurs. Today, the bank has 41 branches across the country and employs a little over 600 people. Last year, it made a profit to the tune of Rs 26 crore only.

Unimpressive, as it sounds, especially knowing that establishments half their sizes rake up better numbers in real term. I am no expert but to my understanding several shopkeepers in Delhi’s Karol Bagh make better profits.

I am sure Mr P Chidambaram must have looked for more comforting examples before announcing this move in his last budget speech. So let’s take up the case of Tanzania.

In 2009, the Tanzanian government started the country`s first all-women bank. Three more branches are yet to be opened. Till December 2012, this bank had made heavy losses to the tune of Rs 162 crore. This seems almost suicidal from the economic point of view.

So let’s ask the fundamental question: Why do we need an all-women bank? I am sure our dear finance minister must have given it some serious thought. The over-arching purpose of having an all-women bank is to extend service to this segment, with loans for small and medium size businesses run by women.

We also have to understand that banking is purely based on economics and can’t run like a charity. Advances and deposits are parts of banking business across the globe. A bank can do these activities till it is in business. When charity or concession comes into the picture, this becomes unviable and end of banking system is inevitable.

In case of all-women bank in India, it looks like the motive is not to provide advances to the large section of the society but to appease them. As per RBI’s stipulated limit, banks have to give five percent loans to women entrepreneurs. But the actual figure is nowhere close to it. Out of 26 public sector banks, only half a dozen banks barely fulfill it. It means neither public sector banks nor private ones are complying with RBI rules. This does not mean that they are not getting proposals from women applicants. The bigger culprit here is the banking system’s complete loss of confidence in women entrepreneurs. The honesty of banks is in doubt!

- Only half of the population has bank accounts
- Of them, roughly 25 percent are women-
- Women employees in the entire banking system is less than 10%

Not only women, but in the case of farmers too, banks are not giving adequate loans. As per RBI guidelines, 40 percent of total advances should go to priority sector, of which farming should get 18 percent. Figures for the last five years show that banks have not been able to disburse more than 13-14 percent loan to farmers. What does this indicate?

This is a clear indication that availability of cash for loans in the market is not an issue, motive of banks is. Flush with funds, our banks seem to have lost their way when it comes to disbursing loans to the right, and more importantly, deserving customers. Customers, on the other hand, are clueless as to how they can harness this opportunity. To my mind, banks need to be more big-hearted but the problem is that banks have also lost a lot of money in this country and they have become shy to a large extent. Growing NPAs have given banks enough reason to be overly cautious while giving loans, especially in the last three years when the NPAs increased to 3.6 percent from 2.5 percent. This is a matter of concern for the government. If the same scenario repeats in case of the all-women bank, how will the government manage? Bailouts are painful and costly. More importantly, can the government take such a risk with taxpayer’s money?

However, for a bourgeoning democracy like ours, all is fair in love and polls! This move can make the UPA government more popular, especially amongst the women voters across the country, but its success as a business venture remains in limbo. Probably that’s why during the discussion before the final announcement, the Finance Ministry mandarins had opposed this proposal ferociously. The logical question: What would the new bank do that existing banks can’t? There seems to be more than what meets the eye. Of late, there have been demands from several quarters that government is not interested in women issues including passage of the Women’s Bill and it had to make a gesture where something for women voters could be counted for.

My biggest reservation against the all-women bank and perhaps the biggest risk factor in the entire concept is the provision of disbursing loans of less than Rs one crore without collateral. Not only does this make the system vulnerable but also opens up avenues for scams and forgery. In a banking system plagued by growing NPAs, this can prove to be the last nail in the coffin.

Rather unfortunate as it may sound but it looks like the purpose of the Bharatiya Mahila Bank is more about women vote bank than establishing a bank for women in the country.

First Published: Tuesday, November 19, 2013 - 20:19

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