The first branch of Bharatiya Mahila Bank (BMB), India’s newest public sector bank, will have to tread boldly to distinguish itself from the all-women branches of commercial banks, said Dr Charan Singh, RBI Chair professor, Indian Institute of Management, Bangalore (IIMB).
In an interview, he suggested the bank, inaugurated by Prime Minister Manmohan Singh on Tuesday, design banking products exclusively for women.
He was, however, sceptical about the location of its first branch: an upmarket, commercial centre in Mumbai.
The BMB focuses on lending predominantly to women, but does not restrict account opening by men. Usha Ananthasubramanian, MD of the BMB, said the bank, with its headquarters in Delhi, plans to lend to businesses either managed by women or making products for them.
Singh, who has served as senior economist at the International Monetary Fund (IMF) and director of Reserve Bank of India (RBI), said the bank would have to work towards true financial inclusion.
In an all-women’s branch of a commercial bank, general products are designed for people across the country. But at the BMB, perhaps there will be synergy between those who design products and those who use them at the grassroots, he felt.
‘Women Manage Finance Better’
He believes women manage finances better, and the new bank could show lower non-performing assets than general banks.
“I would like to go back to the times of Mahatma Gandhi who said if you educate a woman, you educate a family,” he said, supporting the idea of subsidies for women entrepreneurs.
Only Pakistan and Ethiopia have experimented with all-women banks. But sooner or later, such banks recruit men and that defeats the very purpose of an all-women’s bank, he observed.
‘Open Branches in Rural Areas’
“The first branch was inaugurated in a very elite place in South Mumbai and in a very elite building. I don’t think the objective of financial inclusion will be served by opening a branch in such an area,” he said.
He urged the bank to set up branches in rural areas, especially in places where commercial and co-operative banks hesitate to operate.