The proposal has, however, traversed through several doubts concerning its viability as there is a plethora of womans cooperative banks and self-help groups (SHGs) with sound knowledge and experience of handling credit issues. Some would argue that government could have achieved a similar goal by altering the definition of priority sector lending to include women or could have compelled the 28 public sector banks to prioritise lending to women entrepreneurs.
However, the inception of a gender-specific bank rose out of the inconveniences faced by women entrepreneurs and borrowers as they approached banks for loans or working capital. Their credibility was often under the scanner as a spin-off of the perceived discrimination against women in the loan-giving process.
International evidence from Bolivia, Indonesia, Uganda, and Tanzania can all serve as a ready reckoner for a women-centric bank. Banco Sol in Bolivia, Bank Rakyat in Indonesia, Access Bank in Nigeria, DFCU in Uganda, and Sero Lease and Finance in Tanzania, provide a good supplement of loans to women from middle- and lower-income families. They thrive on better loan repayment records of women than men.
A case for women's banks
The spread of Indian banking services accessed by women can be examined for two indicators: the extent of credit supplied and the deposits received from women. If we consider the number of loan accounts held by individuals (household sector) in scheduled commercial banks (SCBs), 16% of the total number of loan accounts were held by women (as on March 2013) which accounted for only 18% of the total repayment amount outstanding compared to a much higher 82% default by men. If we consider deposit accounts, the share of accounts in the name of women stood marginally higher at 24.2% of the total deposit accounts.
Banking access remains skewed
Gender inequality in access of banking services is substantially reflected in rural-urban geographical divisions (chart 1). However, the repayment amount outstanding for women in rural areas remains as low as 16% of the total unpaid amount vis--vis 75.9% of the amount defaulted by men in similar areas. The habit of saving based on MFI data is often observed to be widely prevalent among women belonging to rural areas (chart 2). Despite this women contribute only about one-fifth of the individual savings mobilised through bank deposits and receive only one-tenth of total individual credit from the banks.
The prevalence of gender disparity, according to some studies of informed opinion, has disproportionately worsened the access across all kinds of SCBs (chart 3).
As India aims for the well-being of women (comprising 48.5% of the total population), their ability to access organised sector lending by the way of a women's bank is a necessity. Women-centric SHGs in India have proven to be financially viable, albeit at much a smaller scale, with exceptionally timely repayment records of borrowers. A linking of womens bank with the SHGs will help to cater the financial needs of the women, supplementing the economically backward strata of society currently beyond the purview of formal banking industry.
Directed lending via the 9 branches of BMB (with many more in the pipeline) will ensure a financially secure future for women, thus fulfilling their personal and professional requirements. The bank will be faced with a variety of challenges and opportunities. However, if BMB measures up to these challenge and optimally leverages the emerging opportunities, it could carve an indelible niche for itself in the Indian banking architecture going forward.
The author is economist, IDBI Bank. Views expressed are personal