From Satara,a critical lesson for all-women bank

The input is how to lend to women who don’t have collateral to back their loans.

Written by Surabhi | New Delhi | Published:November 19, 2013 2:27 am

For the Bharatiya Mahila Bank — India’s first national women’s bank — it is a humble rural cooperative women venture in Maharashtra that has provided the critical input to succeed. The input is how to lend to women who don’t have collateral to back their loans.

Chetna V Sinha,founder and chairperson of Mann Deshi Mahila Sahakari Bank explained that this is the prime weakness in giving loans to women. The cooperative bank got around the problem by asking the husband of the woman to give an undertaking that his wife is a co-partner in the property and she is taking the loan to develop her household. This is the same technique the Bharatiya Mahila Bank plans to adopt.

In fact,it is Sinha who advised the new bank to do so. To become a part of the financial inclusion story,it is essential that the bank adopts this hybrid model. Banks would otherwise give loan only against a single unencumbered property rights. “It is wrong to say that women do not have collateral as even if the property is not in her name,she does have a part in it,” Sinha told The Indian Express.

Mann Deshi Bank had approached then Bombay High Court Judge CS Dharmadhikari in 2000 for a legal opinion on the issue. The Satara-based bank then rolled out the special system for lending to such women. And with a repayment rate of 98 per cent,it has demonstrated this is a feasible option. The Bharatiya Mahila Bank is to be inaugurated on Tuesday. It was promised in this year’s Budget.

“The domestic dynamics of gender bias tends to affect banking rights too. We have tried to overcome this problem in all our services. For instance we find electronic passbooks suit women more,” she said. Started in 1997,the Mhaswad (Satara)- headquartered Mann Deshi Bank is run exclusively for and by women. Apart from loans,it also provides financial services including savings bank accounts,door-step banking,pension and insurance products to impoverished women in the region. With short-term and long-term loans,funds against gold,housing loans,group loans as well as lending for consumption needs such as marriage and livestock,Sinha’s bank also gives a 1 per cent rebate on interest to women who own property.

“Men are welcome to open savings bank account but it is only women who are eligible for loans,” said Sinha who was recently awarded the 2013 India Social Entrepreneur of the Year award by The Schwab Foundation for Social Entrepreneurship,a sister organisation of the World Economic Forum.

In fact,with women constituting more than 80 per cent of its 1,85,000 customer base of the Mann Deshi Bank,finance minister P Chidambaram who gave the award jokingly said,“I thought we were going to inaugurate the first Women’s Bank in the country but you are already running one such bank.”

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