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It doesn’t matter if it’s going to really help women or not, but at the expense of some short change (Rs 1000 crore), P Chidambaram has tried to add some oomph to otherwise staid phrases such as “women’s empowerment” and “inclusive financing”.
Whether they got the entire plot right or not, some women’s organisations have even welcomed the move.
If the finance minister and the UPA were indeed serious about women’s empowerment and inclusive financing, they didn’t have to invent anything new, but to look inward. One of our greatest national institutions, the India Post, has the right infrastructure, plans and decades of experience to translate this intent into action.
And the government would need to spend only half this money and start with absolutely no boot-up time.
Before going further, let’s ask Chidambaram, a few fundamental questions about his fancy women’s bank.
Will this bank for women serve the entire country? If yes, how long will it take to roll out across the length and breadth of India? Will it go to the hinterlands, where bulk of our disempowered and un-creditworthy women live? What is that “extra” which will make it work even when nationalised banks and micro-credit institutions are struggling to “include” people at scale in rural areas? Most importantly, will banking rules change for women’s inclusiveness or in simple words, will you lend without collateral? Will you have door-to-door women-agents who will help illiterate and home-bound women bank?
A similar effort in Pakistan (only in terms of the name – women’s bank), which looks like the idea that the UPA has borrowed from, doesn’t inspire much. All that Pakistan’s First Woman Bank (FWB), could achieve so far in the last 14 years of its existence is 38 branches. And its visage is quite corporatish.
Now let’s look at the banking services of the Indian postal system that should have been Chidambaram’s choice for helping women.
It has 154, 979 (yes, more than 1.54 lakh branches) post offices, out of which nearly 90 per cent are in rural areas. Each post office is a veritable bank, which has been running something called Post Office Savings Bank for decades.
People who grew up in rural areas without banks, or in places where petty bankers were too highhanded to entertain the illiterate villagers, know where to go for the safe-keep of their precious money: that little window at their neighbourhood post office.
It’s not a long trek to the post office. There is a post office for every 7176 people in the country. In rural areas, the coverage is even better – one for every 5682 people. When the UPA government was struggling to find a way to transfer the wages for NREGA beneficiaries, it was this network that came to its rescue. About 2.2 crore people get their NREGA payments through the post offices.
People in rural and semi-urban areas who are familiar with the post office savings banks also know that it is the most women-friendly and inclusive banking system where agents even come home to take your money, update your passbooks and even return the money on maturation.
In rural areas, there are about 2.69 lakh agents (Grameen Dak Sevaks) who come home to help people, mostly women, with banking. Almost all these agents are also people from the neighbourhood and are familiar with the beneficiaries. It is a unique banking eco-system that only Indian Post can claim credit for. It is a model that has evolved over time and is very hard to replicate because it is driven by the sheer needs of people, and nourished by trust and relationships.
It’s impossible to find another system, than the Indian Post, that has such penetration and coverage anywhere in the world. Unarguably, there is no other network of such scale. Although they are not directly involved in financial transactions, how many of us know that each postman is obliged to know every household, right up to the doorstep, in his locality?
And this is where, the UPA is coming up with its idea of a bank for women and financial inclusion. Why do we need a new system, that will take at least a few decades under the best circumstances to spread out, when we can easily strengthen and expand a functioning network?
More over, while announcing the all-women bank, the UPA hasn’t told us many things, which really makes one doubt its intentions.
The most important is that the Indian Post has not only thought of converting its savings bank network into a complete banking system, but also has taken concrete steps. Its proposal is to set up a Post Bank of India and is all ready to apply for a banking license by July under the new RBI guidelines.
At present, the post office savings banks are only about savings and do not offer credit and other services which are essential to make them real banks, and work more inclusively. The main idea behind the Post Bank of India is to make available the entire range of banking services. The Department of Posts has even hired consultants to prepare an application to the RBI for its bank.
But being a government department, this progressive move will require cabinet approval. According to highly placed sources, Kapil Sibal, who is responsible for the department, is very keen on this idea and has been pushing for it for some time. Anybody with a modicum of sincerity on inclusive and women-friendly banking should have gone to town with it and celebrated it big time.
Instead, the finance ministry kept it away from us and is trying to roll out a totally superfluous system with no guarantee for results.
The Post Bank of India, is an idea that is born out of sheer experience and necessity, and its bonafide right to run a banking network. Let’s look at some more numbers.
The savings banks scheme has a whopping cash balance of about Rs. 6 lakh crore and about Rs. 22.5 crore accounts. It also includes more than a million of senior citzens’ savings schemes. The most striking part of this is that 89 per cent of it serve the country’s rural areas. Significantly, all this money is lent to state governments (its main source of public borrowing) and not to loss-making airline companies.
The postal system also runs a low-premium Postal Life Insurance scheme serving about 1.69 crore people. In the last two years, the Department has invested about 10-20 per cent of the premiums in mutual funds with considerable success. Its portfolio managers are as good or better than that of the regular banks.
Kapil Sibal and his team has done their home-work in preparation for the Bank very well. At present, the department is rolling out the IT-backbone for Core Banking Solutions (CBS), which will enable account holders use ATM cards in any part of India, transfer money across branches and do other transactions. The backbone is being laid by none less than the IT-major, Infosys.
In a nutshell, everything is ready for a headstart to roll out perhaps the world’s biggest inclusive and women-friendly government banking network.
But then, banking is the hallowed preserve of the finance ministry. That is Chidambaram and his elite officers of the Banking Division in the ministry. Why should Kapil Sibal get into banking? Let him have his five minutes of glory by releasing commemorative stamps!
Who cares if people, much less women, benefit or not. It’s all about symbolism. And it will continue to keep India the poorest super power in the world.
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