Budget 2013: Do we really need a women’s bank?

In the Thursday speech of the Finance Minister, he announced that his government was setting up a public sector Women's Bank (WB) by October. 

It would receive an initial capital of Rs 1,000 crore. Since it would be a public sector bank, it would not need to be issued a special license by the Reserve Bank of India. 

The RBI recently announced that it was going to issue new bank licenses to private players, but this WB can be set up without being subject to the same licensing scrutiny. 

We don't have more details as yet, but this announcement caused quite a flutter. Was this the very first such bank in the world?

Not too many examples of women's bank in India

One has existed in Pakistan for more than fourteen years. It has 38 branches and has not created much of an impact. There is also a Women's World Banking organization based in New York. But that's not really a bank. It is just a network of microfinance institutions around the world. 

It seems that there are not too many examples of this kind, at least in India. But think again. We have women's special trains run on the central and western railway in Mumbai during rush hours. 

These "ladies' specials" have been running for many years, and nobody raises any eyebrow about them. We have women's taxis, with lady drivers operating in Mumbai as well as other cities in India. 

SHG movement mostly spearheaded by women

The Self Help Group (SHG) movement is mostly spearheaded by women. An SHG is a group of about twenty women which is not registered, but is recognized by banks and microfinance institutions. 

An SHG can open a single bank account, but otherwise manages finances of its members by itself. So, within the SHG, women can deposit borrow money at agreed interest rates. It operates like a "bhishi" or kitty group chit fund, also called a "bachat gat". 

Why do we need a women only bank?

The SHG is linked to the formal banking system, and hence this is called the SHG linkage model. There are about 2.5 million SHG's in India accounting for almost 40 million women. 

So if the SHG model ensures banking access to women, why do we need a women only bank? But think again. Many states in India have 50 per cent reservation for women in the village councils, the panchayats. 

Most municipal corporations have 33 to 50 per cent reservation for elected women corporators. The Parliament has been sitting on a bill to reserve 20 to 33 percent seats for women. 

Can women only bank be justified?

In all these cases, the women have "access" to governance through their elected representatives. Yet we feel convinced about the need to "reserve" seats for women, whether in village and city councils, on BEST buses or trains. 

Similarly, perhaps the need for a women only bank can be justified. As usual, the devil is in the implementation. 

In metro cities like Mumbai, maybe the need is less acute, although even here there can situations when women feel intimidated about access to banking.

It can be a boon in rural, semi urban areas

But this can be a real boon in rural and semi urban areas, where the mesh of caste, class and gender creates a peculiar power-based intimidation. 

Women of all castes, and especially from poorer sections would feel considerably empowered if they were dealing with a women only branch, where they would be welcome, and given dignity. 

Will women’s bank as an idea work?

One of the unique benefits of the National Rural Employment Guarantee scheme has been that women's participation is almost 50 per cent. 

Since the NREG sites provide creche facilities, and have to be compulsorily within 2 kilometres of the village, the women have found it considerably easier to enroll themselves. 

The dignity that comes by earning a daily wage for one's labour cannot be quantified. This "paid work" for women also means they enter the formal economy. So, in many ways, the women's bank can be an idea which will work.

Source : Ajit Ranade, Mumbai Mirror