A public sector bank solely for women? At once, it is an appealing concept.
A few all-woman branches were started by banks in the 70s and a couple of them still continue. These were more in the nature of token gestures, leaving no significant impact.
Inaccessible for poor
During the last few decades, women have been playing a prominent role in services and industries, a few having even broken the ubiquitous glass ceiling to occupy top slots. Their numbers, too, have gone up remarkably in the banking, insurance and IT sectors.
In rural areas, women from the poorer sections have not been just home makers but active earners as agricultural labour, domestic help or as small traders.
Thanks to the evolution of self-help groups (SHGs), the participation of women in economic activities has swelled. Their interactions with formal or informal financial agencies have increased.
No doubt, viewing women as a vote ‘bank’, Central and State governments are goading banks to lend more to women in weaker sections and rural areas. Banks, too, in order to be competitive, introduced special services and products for women.
Excluding the women in SHGs, the demographic profile reveals that more women in metros and urban centres deal with banks due to the imperatives of lifestyle and time. The educated amongst them have even taken to alternate channels such as ATMs and Internet banking.
However, banks remain inaccessible and lukewarm to the illiterate and poor, both in urban and rural areas, especially for credit. What’s more, women are averse to visiting small and remote places where only men are employed.
An institution run by women, for women, would, therefore, make a difference.
Beware RRB experience
Much depends on the shape the proposed bank takes. Will it be another carbon copy of the PSBs? While certain basic features can’t be changed, keeping the rationale in view, the objectives need to be clearly spelt out.
An innovative approach, without modelling it on any existing institution, is required. The bank has to provide easy access to basic banking services of savings and credit to women, with a focus on financial inclusion.
But the statement of the Finance Minister that “...mostly to women and women-run businesses” gives rise to doubt. Since the bank is meant exclusively for women, exceptions should not be entertained.
If exemptions are indeed needed at the initial stages to ensure the viability of the project, a clear time frame for their withdrawal should be specified. We have before us the example of the regional rural banks (RRBs) with ‘low cost and local feel’, which failed to achieve the basic objective of helping the farmers, artisans and agricultural labour in the villages.
They aped their sponsors, diversified their activities and finally became more urban-oriented.
Agri, allied activities
The proposed bank has to be in the public sector. The authorised share capital should be pegged higher and the Government should contribute Rs 1,000 crore as initial capital, at one go. Based on business growth, it can be augmented subsequently.
The bank’s board should preferably consist of eminent women with experience and knowledge of finance, banking, insurance, agriculture, rural and cottage industries and micro, small and medium enterprises (MSMEs). They should also be familiar with the socio-economic milieu of the poor and weaker sections of women.
Though women need special treatment or consideration, the bank must be run on sound commercial lines, while not looking at profits as a prime consideration.
Being the first of its kind, the bank should become a role model. It should go beyond banking. Improving financial literacy should be the first step.
Upgrading the skills of literate women customers by providing entrepreneurial training, covering basics of general and financial management and marketing, imparting some computer knowledge for use of the Internet for communications, banking and business information should form part of the relationship. Linkages with development wings of the Government for those engaged in agriculture and allied activities should be arranged.
The basic services of deposit schemes, payments and remittances, and credit should be given prominence. Corporate credit, exports, forex and capital market services can follow, as these are available in all banks.
Women needing these services are resourceful enough to access these services at any bank. Agency functions, which can generate income and attract customers on behalf of the Government, insurance companies and mutual funds, for payments and collections, can be handled without diluting the basic objectives. The rates of interest and fees would have to be competitive as discerning women can choose to deal with other banks.
Click with technology
Financial inclusion being one of the prime objectives, at least 50 per cent of the branches should be in rural and semi-urban areas, though outlets in metro and urban areas too are necessary to garner volumes for sustained growth, viability and stability.
At all places, brick-and-mortar outlets may not be warranted or viable, hence the services of women banking correspondents could be used. Instead of competing for prime business locations at high cost, keeping the customer profile in view, the branches should be located in residential areas.
It is essential to have knowledgeable, competent and willing women personnel to run the bank. This is not going to be easy. The bank may have to employ people from rural areas to minimise attrition.
The Finance Minister says the bank would have to ‘predominantly’ employ women. Why not aim at 100 per cent? Care has to be taken to ensure that the bank does not succumb to male domination and keep women away.
From day one, the bank needs to have the latest technology, relevant for financial inclusion — including core banking, smart and biometric cards and mobile banking. Job knowledge, skills and professionalism are essential, whether employees are men or women.
In areas such as remuneration package, organisational set-up and delegation of powers, the bank could apply the experience and wisdom of older, successful banks.
(The author is former MD, State Bank of Mysore)