That women in India are much more financially excluded than the men is evident from the following figures: as of March 2011,only 21 per cent of total bank deposit accounts were held by women and these accounted for just about 12 per cent of the total volume of deposits. Similarly,women availed only 18 per cent of the total small credit from banks in 2011. The problem must be understood in the context of larger issues arising from the underprivileged status of a woman in India.
Finance minister P. Chidambaram has proposed to deal with the financial exclusion of Indian women by setting up a womens bank. There are two reasons why the idea is not exciting for some of us. First,merely setting up an all-women bank is not likely to address the core issue of attitudinal bias against women,which is so prevalent in our banking institutions. There is both overt and covert exclusion in the system. Second,there is no guarantee that the all-women bank is going to mitigate the problem of financial exclusion of Indian women. My scepticism also stems from the limited success of other previous attempts at focused banking,such as the setting up of the regional rural banks.
In order to assess the likely impact of the proposed women-only bank,it would be interesting to draw an analogy with the launching of the regional rural banks in the 1970s. The RRBs were set up in 1976 as special conduits of credit delivery in rural India. They were supposed to combine the local feel and familiarity of rural problems with the professionalism and large resource base of commercial banks. Thus,there was an acknowledgment that mainstream commercial banks could not effectively cater to the needs of the villages,so a new type of locally oriented banks,the RRBs,had to be set up. This is very similar to the proposed womens banks ambition to address the gender-related issues of financial inclusion.
On the face of it,there is nothing wrong in setting up new institutions that target specific segments of the population. However,we have seen in the case of the RRBs that,less than ten years into operation,their financial viability became a matter of concern. Starting from 1981,more than 10 committees were set up to address various issues (of financial viability,reconstruction and amalgamation,manpower and human resources and technological upgradation) relating to operation of the RRBs. Following this,the RRBs went through the process of recapitalisation and amalgamation so as to make them financially sound. Due to amalgamation and mergers,some RRBs have become large entities that defeat the very concept of locally oriented banks.
Ironically the number of urban and metropolitan branches of RRBs has increased over the years,while that of their rural branches has declined. Between 1992 and 2009,there was a 22-percentage point decline in the proportion of rural bank branches of RRBs while there was a 16-percentage point increase in the share of their non-rural branches. Thus the creation of localised rural banks as a means for tackling the lack of familiarity of rural problems on the part of mainstream commercial banks does not seem to have served its purpose. In fact,rural India is much more financially excluded today when compared to the 1990s,both in terms of banking outlets and availability of institutional credit.
Going by this analogy,it must be asked if the women-only bank can promote financial inclusion of Indian women unless we address the core issue of exclusion at a more fundamental level. Attitudinal changes in our banking system should be an essential and integral part of all our efforts to promote financial inclusion. Not too long ago,the Rangarajan Committee on financial inclusion had emphasised the correction of mindsets of the bank staff. Citing a study conducted in Madhya Pradesh,the committee highlighted that the majority of the bank branch managers held negative attitudes towards lending to [the poor,although [the poor,if guided properly,not only succeed as entrepreneurs but also are good repayers. There is no doubt that if the poor happens to be a woman,this discrimination gets doubled.
Given the limited resources,the need of the hour is not yet another new institution,but the strengthening of the existing ones. The existing banks must be made more gender friendly and gender sensitive. We must also understand that the creation of an all-women bank may lead to the segmentation of banking services on gender lines in the long run. For example,following the creation of the all-women bank,it will not be surprising if a mainstream bank refuses to entertain a woman on the pretext of not being a womens bank and asks her to go to the womens bank for her banking needs. Just as in our city buses,when a woman wishes to occupy a non-reserved seat,she is often shown the ladies only seat.
The writer is associate professor,Jawaharlal Nehru University,New Delhi. Views are personal,email@example.com