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Shinjini Kumar
Director, PricewaterhouseCoopers
'Creating an institution with critical mass of talented women might be a good starting point to tap local talent. It will also increase the visibility of women in the decision-making space'
Let me begin with affirming my belief that all exclusion is, in the long run, a negative-sum game. And yet, there is a strong case for positive discrimination as a policy tool to counter inequality. What settles this complex debate at a personal level for me is the memory of a young girl in Bihar who dreamt of working in a bank. Her family allowed her to graduate from a girls' college but would not allow her to work with men. Well, the finance minister seems to have heard her prayers.
Targeting women as primary customers and employees of a bank to be promoted by the government is a rare combination of good economics and good politics. The Government of India is in the business of banking; its pre-eminent position being challenged recently. In the backdrop of the upcoming election and lack of ability to fund welfare programmes, the Mahila Bank announcement creates the feel-good factor, and can yet be a profitable idea.
There is strong empirical evidence to suggest that financial empowerment of women has a multiplier effect on the well-being of families and, therefore, on the economy. An all-women bank will have significantly greater capacity to fast forward such empowerment. In the context of India's huge burden of poverty and its debilitating impact on human capital, there is a critical need for urgent measures in this area. If implemented properly, this could be a meaningful step in the right direction.
The more important question to ask is around key success factors for such an enterprise. The first is the vision itself. Envisioning it as a welfare or non-profit scheme would be setting it up for failure and further perpetrating the patronising attitude towards women, whose lives demonstrate resilience, great common sense and resourcefulness amid harsh circumstances and indignities. Women, at every level of society, have shown the ability to take sound financial decisions, manage credit and become successful entrepreneurs. Equally important, there are many successful women bankers, providing role models for other women. Hence, finding the right leaders and clients to build a successful institution is feasible, provided clarity of vision.
The second critical success factor as well as a great opportunity is the ability to tap into local talent. Like the girl mentioned before, there are innumerable women in Tier II-VI centres, who are not able to access the world beyond home. While men take the opportunity of migration to somewhat even out demand and supply, women tend to be less migratory and remain housebound or underemployed. Creating an institution with critical mass of talented women might be a good starting point to release this latent human capital. Hiring local talent has many positive externalities such as knowledge of the ecosystem, economic activities, credit and thrift habits and can help build a better bank. It also has positive demonstration effect by increasing the visibility of women in the decision-making space. The challenge here is the "normal" public sector policy of recruitment and transfers that is somehow construed to be a virtuous practice and directly conflicts with this idea.
Needless to say, the usual key success factors around capital, costs, systems, technology, risk, governance and processes are taken as basic prerequisite. The differentiation needs to be built around customers, products and service quality. It is critical to discard the assumption that an all-women bank will be inherently wiser about dealing with women customers. It is important to continuously build learning and systemically use the same to achieve the vision. It is as easy for women to fall prey to stereotyping and discriminatory behaviour as it is for men. As in any successful institution, it takes leadership and effort to overcome bias and malpractice.
One last word about the customer. Lack of independence and ability to post collateral are known handicaps. Even though property registrations are increasingly in the name of women owing to stamp duty incentives, women often do not practically have the right over property or even personal assets such as gold. Fortunately, there are many policy initiatives aimed at putting subsidies, pension and other benefits in the hands of women, creating convergence that banks can leverage upon. There are targeted programmes to keep women in schools and colleges and guarantee basic livelihood. To proceed with conviction, it is important to bear in mind that in the long run, institutions do impact society.
These views are personal
Secretary, AIPWA
'Women's disempowerment - their lack of mobility or vulnerability to shame - is seen as a form of collateral. The impact of micro-credit on women can be humiliating rather than empowering'
In this year's Budget speech, the finance minister announced the Mahila Bank, an all-women public sector bank, as a key measure towards women's empowerment. This announcement came in the wake of a countywide upsurge following the brutal gang-rape of a young woman in Delhi, resulting in her death.
One of the most significant things about the movement was that instead of asking for "safety" alone in a narrow sense, it demanded measures to expand and protect women's "azaadi" - their freedom and autonomy. By doing so, the movement posed a direct challenge to the patriarchal attitudes and paternalism that have largely marked public policy towards women in India.
Women's autonomy is crucially linked to their economic independence: this fact seems obvious. But do measures like the Mahila Bank promote women's independence and autonomy? The first question that the announcement of the Mahila Bank begs is: Why do we need a separate women's bank? Why can't existing public sector banks offer affordable institutional loans to women? By creating a women's bank, are existing banks being absolved of their responsibilities to women?
It is well known that the stringent conditions and complicated nature of loans from banks make them inaccessible to all deprived and marginalised people, women in particular. Their lack of collateral makes it especially difficult for women to borrow from banks. Instead, they are left to the mercy of the traditional moneylenders who charge exorbitant rates of interest and take jewellery or similar personal effects as mortgage.
Instead of ensuring women's access to institutional credit, the government instead promoted micro-credit as the solution. Micro-credit was claimed to be the way towards women's "empowerment". In fact, micro-credit has tended to exploit patriarchal structures by seeing women as being more "efficient" and "credit-worthy", on the assumption that they are more susceptible to social pressure and coercion and less mobile and, therefore, less likely to decamp or default on a loan. As a result, women's existing disempowerment - their relative lack of mobility, for instance, or vulnerability to "shame" - is actually seen as a form of "collateral". The impact of micro-credit on women, compounded with the woeful lack of institutional credit and bank loans, then, can be humiliating and even devastating rather than empowering.
Take the case of Andhra Pradesh, where some time ago, there was a spate of suicides by women members of self-help groups. SKS Microfinance was one of the microfinance institutions (MFIs) with the greatest penetration in rural districts of the state. Vikram Akula, the CEO of SKS, figured on the Time list of the world's 100 most influential people, along with Nobel winner Mohd Yunus and was awarded the "Social Entrepreneur of the Year" award by Sonia Gandhi. In 2010, SKS Microfinance became the first MFI in Asia to go for an initial public offering listing on the stock market, attracting a record Rs 1,600 crore. SKS boasts of a 5.8 million loan base, mainly among rural women in Andhra Pradesh, and a loan recovery rate of over 99 per cent.
In Akula's autobiography, A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability, he writes, "When we started... people decided to test us by not paying... We instructed our loan officers not to leave... until the repayment came… The entire village would realise there was some issue... And that person would lose izzath (face). Losing face is a fairly devastating thing in a village context, and people will do anything to avoid it." The book also tells of an instance where the loan was taken to buy a goat but used to buy food instead, leading Akula's assistant to tells the recipient: "Buying food doesn't generate income, so you'll be no closer to getting out of poverty that way. Either buy a new goat, or give us back the loan money." The MFI was openly using the threat of loss of face as a loan recovery tactic, and was pressuring women who in distress used a loan for a non-profitable purpose!
Micro-credit, therefore, is no substitute for the urgent expansion of institutional credit infrastructure and credit access for the poor, especially women. The "women-only" bank appears to be another alibi for making all public sector banks accountable to providing affordable low-interest credit for women. Instead, it seems that the Mahila Bank will let other public sector banks off the hook, so to speak - letting them remain rigid, gender-blind and hostile to all those who lack collateral.
