Can Women’s Bank in India take banking to the next level?
One of the key announcements made by Finance Minister P Chidambaram in the Budget 2013-14 was the setting up of India’s first Women’s Bank as a public sector bank. The government has earmarked a sum of Rs 10 billion to start with for the new initiative, which is supposed to commence in October this year. Following the announcement, the government also declared that preparations are under way, as the IT backbone for Core Banking Solutions (CBS) will soon be rolled out. This will enable users to use ATM cards in any part of India, transfer money across branches and do various other transactions.
According to the FM, “The new bank will pave the way to a completely new level of banking and is a major step towards women empowerment.” In the light of the announcement, it is essential to explore some of the possibilities and challenges of the first-of-its-kind an all-woman’s bank, especially on the occasion of International Women’s Day.
For the women by the women
In India, women have been heading several banking operations in the recent past. Two public sector banks also have women as Heads, but there is no bank that exclusively serves women. The government felt the need of an exclusive bank that lends mostly to women and women-run businesses and also employs predominantly women. The objective behind this, as the FM pointed out in the Budget session, is to address the gender-related aspects of empowerment and financial inclusion.
“The Women’s bank is a novel idea of including women entrepreneurs in the mainstream of the economy and will help increase their contribution to the Indian growth story,” told Meera Sanyal, Country Executive, RBS India to Business Standards.
As the Women’s Bank will be largely run and managed by women professionals, there will be greater employment opportunities for women professionals in the country, in various departments spanning finance, accounts, operations, information technology and human resources. Currently, the women employee strength in the commercial banks in India is less than 20 per cent. The figures are even lower in the rural and semi urban areas. So the expansion of branches of the Women’s Bank that will recruit mostly women professional, will lead to a substantial rise in the number of women workforce, giving a boost to the country’s economy.
Traditional banks always do not cater to women’s need. These banks should provide facilities in terms of allowance, incentives, maternity leave as well as other benefits that will make them work efficiently yet offer enough flexibility. Apart from increased women workforce, the initiative is expected to empower women and increase their financial independence. It will support women self help groups (SHGs) and women’s livelihood, especially in rural and semi-urban women, who often find it challenging to approach traditional banks for loans and various financial schemes.
The success formula
Although the Women’s Bank initiative has been facing criticisms from several quarters including opposition leaders and a section of the public, many thought leaders believe the proposal sends a strong message that the government is focused on women’s issues. According to them, if certain measures and guidelines are followed, the Women’s Bank can certainly be a successful endeavor.
“The new bank is expected to have adequate trained women employees to provide banking services to even to the unbanked population of India,” believes R Chattani, General Manager, IT, UCO Bank. For example, female employees from the existing PSBs can be deputed to work for the new bank. They should be given a deputation allowance for moving into the new bank at least for the first three years. Thereafter, they should be given the option to either return to their parent bank or become permanent staff of the new bank. This will streamline the recruitment and training process.
It is also important to create visibility and have more of such banks across the country. In fact, there should be branches spread out in every state, with a special focus on smaller cities where the need is much more, believes Chattani. The new bank should have a new business model. For instance, the bank should offer attractive schemes to encourage girl children pursue higher education by offering education loans at reasonable interest rates.
According to Kamal Karanth, Managing Director -Kelly Services, a global HR consulting firm, although the concept is unique, it requires a lot of planning. For example, there are important questions the government has to answer, like, if the Women’s Bank is aimed at serving the entire country, how long will it take to roll out branches across the country? Will the thrust be on the hinterlands where majority of un-creditworthy women live? What will be unique about Women’s Bank that will differentiate it from other regular PSBs in terms of service and development and finally, will it really increase women’s inclusiveness in the right sense, or it is just another vote bank for the government.
The government should create the right governance framework and ensure that there is enough awareness among women on the benefits of such banks. As Karanth points out, the key to the success of women’s banks as in every other areas of the Budget 2013-14 is an effective deployment strategy and its execution.
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