Loris Luyendijk’s banking blog in The Guardian in August 2012 cited one question that the entrance examination paper for a trainee programme at Merrill Lynch in 1972 had: \u201cWhen you meet a woman, what interests you most about her?\u201d The correct answer, Luyendijk said, was beauty. Those who thought intelligence, were given low marks. There was, of course, no question on what interests one the most when meeting a man.
\nThis is gender discrimination at its worst in the financial sector. Do we see this in 21st century India? There is no gender discrimination in the Indian financial sector\u2014whether at the organizational level or in choice of consumers. Then why does finance minister P. Chidambaram want to set up a bank exclusively for women customers and run by women? The government plans to pump in Rs.1,000 crore equity into the bank. A committee has been constituted to prepare the blueprint for the bank by April and the project is expected to take off by October.
\nOne reason could be political. Women as a gender are not a separate constituency yet in India. There are urban women, rural women, wealthy women and poor women but women as a gender are not a vote bank. This is a relatively low-cost experiment to create that.
\nBeyond politics, as a symbol of women\u2019s empowerment, this is not an idea to be scoffed at, but translating this into success is no easy job. There are quite a few cooperative banks in India that give loans to women borrowers but they have not been able to make much headway; and at least two cooperative organizations are run exclusively by women\u2014the Ahmedabad-based Shri Mahila Sewa Sahakari Bank Ltd and Mann Deshi Mahila Sahakari Bank Ltd\u2014but both of them have a limited geographical presence.
\nGlobally too there aren\u2019t too many instances of banks run by women, for women. Tanzania Women\u2019s Bank is one such example. In 1999, a group of women entrepreneurs mooted the idea of a women\u2019s bank to then president Benjamin William Mkapa and it took eight years for the bank to set up, with the government holding 97% equity stake and private entities the rest. It focuses on low-income earners, small businesses and small and medium enterprises and men can also open accounts in this bank based in Dar es Salaam. Its name was changed to Tanzania Women\u2019s Bank Public Ltd Co. last year when the bank planned to raise money from public and list its shares. A BBC report says on the day the bank was launched, 110 women opened accounts.
\nAhead of Tanzania, Pakistan had set up First Women Bank Ltd in 1989. Late prime minister Benazir Bhutto was instrumental in establishing this to meet the needs of women entrepreneurs. It commenced business in December 1989 with five leading public sector banks\u2014National Bank of Pakistan, Habib Bank Ltd, Muslim Commercial Bank Ltd, United Bank Ltd and Allied Bank Ltd\u2014holding 90% stake and the government the rest. After 23 years of existence, the bank has about 60,000 women customers, handled by 600 employees spread over 41 branches over 24 locations. Its business growth is far lower compared with other banks.
\nThe only other example of a special vehicle for women is Women\u2019s World Banking Ghana Savings and Loans Co. Ltd. Starting operations in 1998, it has seven branches in Ghana\u2019s Golden Triangle. It\u2019s an affiliate of the Women\u2019s World Banking global organization that has a network of microfinance institutions and banks working to help low-income entrepreneurs around the world, offering loans to at least 16 million entrepreneurs and households in 33 countries in Asia, Latin America, Africa, the Middle East and Eastern Europe.
\nIn India, the self-help groups (SHGs) and microfinance movements have been driven by women. Such groups are an intermediary between the banking system and borrowers. Banks and microfinance institutions are comfortable dealing with women borrowers as they are more responsible and disciplined in their approach in paying back the money. While many men in rural India spend their meagre earnings drinking alcohol and gambling, women keep the hearth fires burning and take care of children\u2019s education. In March 2011, there were close to four million exclusive women SHGs, involving 51.2 million women borrowers who got Rs.26,214 crore in credit.
\nA woman\u2019s bank will not become successful in India if it focuses only on banking. If our finance minister is serious about this project, he must see that this bank goes beyond taking deposits and giving loans and becomes a vehicle for social change, taking care of other things such as education, vocational training, etc and help in empowering women in every possible way. At a parallel level, as Vijay Mahajan points out, we also need to address two structural issues\u2014women must have right to property (otherwise they can\u2019t offer collateral for a loan) and get adequately involved in formal economy through jobs and entrepreneurship. Professional urban women do not need a bank of their own but rural women, particularly in those pockets of India which are fraught with casteism and gender discrimination, will find in it an oasis.
\nIf it doesn\u2019t do that, the project may backfire as public sector banks may stop welcoming women consumers when they have an institution dedicated to them. Also, instead of setting up a bank in the public sector, the finance minister could have tried this experiment in the private sector. For instance, one of the new private banks that will soon set shop could have been entrusted with this job with the right kind of promoters. In India, at least 70% of the banking industry cannot fail as the government owns the chunk. By setting up one more government- owned bank, we are just increasing the risk to the system.<\/p>\n","protected":false},"excerpt":{"rendered":"
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