Unfair deal

56BharatiyaMahilaBank Slow day: A Bharatiya Mahila Bank branch in Mumbai.

Government seems uninterested in the growth of Bharatiya Mahila Bank

The Bharatiya Mahila Bank branch on the ground floor of the Air India Building at Nariman Point in Mumbai has a cabin that reads 'Usha Ananthasubramanian, Chairman and Managing Director'. The cabin, however, has been unoccupied since Ananthasubramanian was appointed CMD of Punjab National Bank in August. The seating area in front of the cabin, furnished in glittering steel, is also unoccupied. There are two women at the counters, who are clearly unprepared for customers. The only customer is in the branch manager's chamber and seems to be trying to secure a loan for a startup in Bengaluru.

Two years ago, the bank wore a very different look. It was the first branch of the country's first bank dedicated to women, and Prime Minister Manmohan Singh inaugurated it amid much fanfare on November 19, 2013. Though some experts questioned the bank's ability to differentiate itself, many others acknowledged the need for a bank focused exclusively on the needs of women. Some experts even argue that differentiators existed, especially because the bank pre-dated the launch of the Jan Dhan Yojana, the current government's flagship financial inclusion programme.

When P. Chidambaram, who was Manmohan Singh's finance minister, first mooted the idea of a women's bank in his budget speech in 2013, students of the Indian Institute of Management Bangalore carried out a survey among women from different classes. “When we did the study, I realised there were many women who would really feel like entering a branch if there were only women and they could open their heart out. It was not a small number—about 30 per cent—who said this,” says Charan Singh, Reserve Bank of India Chair Professor at the institute.

In fact, the Mahila Bank did come up with some products that specifically addressed the needs of women, such as BMB Parvarish, which offers loans for setting up daycare centres, and BMB Shringaar, a loan for setting up beauty parlours for which the bank tied up with parlour chain Naturals and CavinKare and Lakme.

However, because the Manmohan Singh government's move to start the bank had smacked of political opportunism (the Lok Sabha elections were round the corner), many people wondered aloud if it would be able to survive a new government. And, it seems their fears were not completely unfounded.

Last year, 190 candidates were allotted postings to the bank after the Institute of Banking Personnel Selection conducted selection tests and interviews. Thirty-five of them received appointment letters in June and ten of them accepted the offer. The others were asked to wait. But things suddenly changed by the end of June. Word got round that the government was planning to merge the bank with State Bank of India. A candidate from Jharkhand said nobody got appointment letter after that. In November, the candidates were told they would not be appointed.

According to a source, SBI did not want the bank to hire these people if the merger was to come through. “These people are stuck in a Catch-22 situation,” says S. Nagarajan, general secretary of the All India Bank Officers' Association. He said many functions at the bank, including opening of accounts and client verification, had been outsourced.

And, there is no clarity from the government on the future of the bank. It is not known if the process for appointing a new chairman has been initiated. However, there have been no orders to stop opening accounts. Two new products—BMB Doctor's Loan and BMB Her Auto—were launched in August.

Also, the bank is in a financially strong position. In 2014-15, profit after tax increased more than 61 per cent over the previous year, and the total income increased more than 200 per cent. At the end of June, total loans and advances stood at Rs395.45 crore; it was a little over Rs155 crore a year before. In two years, the bank has opened 85 branches. From all accounts, none of its assets has gone bad. As the bank expands, it will need more capital and that might be putting the government off. It does not feature on the list of state-owned banks that will receive fresh capital from the government under the Indradhanush scheme.

Charan Singh of IIMB says Ananthasubramanian was on the right track when she was leading the bank. Yet, he says, if the aim of the bank was to increase women's participation in the banking system, it has not been achieved because of its limited rural presence. Here, the merger with SBI might be a good idea as the latter is a banker to the masses. A clutch of new small finance banks, many of them with the experience of running microfinance institutions, will also improve women's access to banking.

Also, Jan Dhan Yojana has already bridged some gaps in financial inclusion. “I don't know how many of these [accounts] belong to men and how many to women, but my gut feeling is women are very few,” says Singh. “It is unlikely that many elderly widowed women would have been part of the 16 crore [bank accounts opened under Jan Dhan].”

Singh sees some 120 million people getting ready to join the workforce in the next decade, and the government will be in no position to employ them. “MSMEs [micro, small and medium enterprises] are one sector which will serve the need of this workforce,” he says. “To start financing an MSME, you need collateral. Where will the women get collateral? Maybe we need to relax the collateral requirements for starting an MSME if there is a woman entrepreneur coming up or maybe we should devise some criteria [for eligibility]. How to circumvent that [the collateral problem] and create a system where women are able to tap resources from the financial industry is something we need to think and plan for the next ten years.”

Until we are able to put something like that in place, banking for women may remain a dark room with a closed door, much like the CMD's cabin in Nariman Point.

* Bharatiya Mahila Bank was started on November 19, 2013, the 96th birth anniversary of former prime minister Indira Gandhi.
* Though focused on women customers, the bank takes deposits from everyone. Lending is mostly to women.
* It was started with a capital of Rs1,000 crore and has 85 branches across India.
* In the first four months of its existence (till March 2014), it posted a total income of Rs45.29 crore and profit of Rs12.56 crore.
* In the fiscal 2014-15, the bank posted a total income of Rs137.3 crore and profit of Rs19.79 crore.

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