A Public Sector Bank (for women only)!

At the first glance, FY 13-14 Union Budget announcement sounds quite innovative and pro-active scheme on part of Indian Union government, aiming at financial inclusion of women in India. After all, we are a nation where women esp. in rural areas are out of Banking brackets owing to several factors viz. illiteracy, patriarchal familial set-up and also hesitation to visit a male-manned Bank-branch. Being a woman myself, I too found the idea quite amusing and equitable. Though the details of the new idea have not yet been revealed by Govt. of India, we can presume that this Bank would be run by the women and for the women.  A thought-bubble comes to me that I am transacting at a Bank surrounded by women Bankers and women customers! This new Bank would provide employment to innumerable women, making them more independent and increasing the skilled women workforce. Women Bankers will certainly be able to better understand the needs of women customers and women entrepreneurs will find it easy to get their loans approved. It will also encourage women to place their savings safely in Banks rather than keep them with themselves/ friends/ relatives. Also, there shall be more coherence and solidarity at branches. Certainly not a bad idea!

However, when I went deep into the subject-matter, I realized that the whole exercise might go futile and was not required in the first place. It is basically in rural and semi-urban areas where women need to be drawn to the Banking system. For this, creating an altogether new Bank from scratch may not serve the very purpose. Secondly, there might be security and safety issues in case even guards deployed at branches are females, as such branches can become vulnerable to robberies. Thirdly, women-only Bank might not turn out to be a profitable business proposition as the business prospects from women (most of whom are not earning) shall be limited. The cost-benefit ratio will be higher if a new Bank is established. As known from fellow bankers, ‘women-only branches’ experiments have failed miserably esp. in urban areas in certain Banks. Banking, after all isn’t a charitable activity but a business which can sustain only on profits. Hence, women-only Bank shall not sustain in the long run.

The Panchayati Raj Constitutional (Amendment) Act, 1992, ushered more autonomy and power to rural women providing for 50% women reservation in local bodies. With this, rural women are more empowered today. Thereafter, proliferation of women SHGs have further granted some financial freedom to women. Now, the only need is to make these SHGs and other un-banked women reach out to the Banks or perhaps, Banks can reach out to these women.

For this, instead of creating a new Bank, the better idea would be to channelize the workforce of existing PSBs and create all-women branches, which shall cater only to women customers. Like we have the ‘Lead Bank’ scheme for agricultural Banking in India, Reserve Bank of India (RBI) can mandate for creating Lead Banks for various regions for financial inclusion of Women too. Such lead banks in each state can collaborate with other Banks and establish all-women branches wherever required. The dynamics and logistics can be worked out under this Lead Bank scheme. If opening new branches for women is not found convenient by certain Banks, they can also use the ‘On-contract door-step Banking executives’ method. Under this, Banks may hire women executives from local areas, give them laptops (which are connected to central servers of the Bank) and assign them geographical area of service. These executives shall be entrusted to open accounts, accept deposits, give withdrawals and provide other simple Banking services to women of a limited geographical region, which might consist of a village or group of villages or a complete district. Further, if any women-specific products are to be designed, they can be done so by the existing Banks themselves. Hence, INR 1000 crore in the recent budget earmarked for the new Women Bank can be channelized in a better way.

Hence, the all-women/ women-only Bank in India seems not to outreason that it is a gimmick on the part of Union government  before the onset of elections as there are alternative ways possible to achieve the target of financial inclusion of women in the country. The objective is noble and worthy; only the path needs to be reconsidered.