The women’s bank, mooted in the Union Budget for FY2014, should be floated as a joint venture between the Government, five-six major public sector banks and a development financial institution, according to Nabard.
The National Bank for Agriculture and Rural Development (Nabard) has assessed that even if the women’s bank (Mahila Bank) collects deposits of various types from women and perhaps other clients, these resources will not be enough for meeting the loan demand.
As the number of women lining up for loans is expected to be large, the bank will have to depend on external resources, which cannot obviously be budgetary resources, in the form of funding support from sponsor public sector banks and refinance from an institution like Nabard.
Partnership
A top Nabard official told the ‘Committee to prepare a blueprint for the proposed India’s first Women’s Public Sector Bank’ that the Government should hold 26 per cent stake in the proposed bank, which will be run by women exclusively for women, while public sector banks and Nabard will together hold 74 per cent.
“This (partnership between the Government, public sector banks and Nabard) will ensure good governance, focussed attention to the principal objective (lending exclusively to women entrepreneurs, achieving financial inclusion and women’s empowerment) and availability of resources at an appropriate cost,” said the presentation.
The three-way joint venture will also lighten the financial burden on the government. In the Union Budget, Finance Minister P. Chidambaram had provided Rs 1,000 crore as initial capital for setting up India’s first women’s bank as a public sector bank. It is expected to start functioning from November.
Objective
The objective of the proposed bank, as outlined by the budget, will be to lend mostly to women and women-run businesses, support women self-help groups and women’s livelihood, employ predominantly women, and address gender related aspects of empowerment and financial inclusion.
As the proposed bank will start its operations with limited number of branches, Nabard said it is imperative that the Mahila Bank would have to depend upon business and development correspondents (BDCs) to source, disburse, monitor and recover loans.
The BDCs will also take up the role of business development in the form of promoting and guiding women self-help groups , and individual entrepreneurs at the lower end of the credit spectrum. The larger clients would be managed by the branches, said a senior Nabard official.
The BDC model, supported by field service officers, will reduce the requirement of having too many bank branches, thereby enabling mass banking with women clients in rural areas.
Nabard is an apex development bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts.