“The setting up of the Bharatiya Mahila Bank is a small step towards the economic empowerment of women. It is also a reflection of our commitment to this cause. I am sure that the bank will fulfil the objective with which it is being established, namely financial inclusion of women and providing them equal and easy access of financial services,” said Prime Minister Manmohan Singh while inaugurating the bank's first branch in Mumbai's Nariman Point.
Analysts believe the bank will find it tough to differentiate itself from rivals and will face stiff competition from state-run and private-sector lenders, and microfinance companies, which already have an established presence in rural India.
“For a successful business model, the balance between profitability and responsibility is important. While providing access to banking services is the responsible objective, improving customer experience or value for the discerning woman will be key to profitability. However, this segment is also being targeted by other banks and, therefore, driving the balance may take some effort,” said Shinjini Kumar, executive director for tax and regulatory services at Pricewater-houseCoopers in India.
Bharatiya Mahila Bank has been set up with an initial paid-up capital of Rs 1,000 crore. Led by Usha Ananthasubramanian, all the eight on the board of directors of the bank are women. The bank aims to increase its branch count to 25 by March 2014.
Currently, all the seven branches of the bank are in urban centres — Kolkata, Mumbai, Lucknow, Guwahati, Chennai, Bangalore and Ahmedabad. This could also prove to be a hindrance, at least in the short-term, in reaching out to rural women.
"While we appreciate the initiative of the government to open an all-women bank, we would have been more satisfied if at least three or four branches were opened in rural centres during the inauguration. A bank like this is more needed in rural villages,” said a senior woman member of a self-help group in Maharashtra.
The government, however, does not appear to share such a concern. Finance Minister P Chidambaram told reporters that the bank aspires to have branches abroad. "I sincerely hope the private sector will also emulate this model.”
According to industry analysts, the bank might need to appoint external consultants to understand the actual needs of rural women and women entrepreneurs.
The upcoming elections in 2014 also cast a shadow on the bank's future, according to some experts. “We are not sure about the changes that would be made after elections. If the opposition party comes to power, there is a fear that the sops will be rolled back,” said the founder member of a Mumbai-based non-government organisation, which works for economic rights of women.
Chidambaram said the bank would get listed in due course, but before that, it needs to get critical mass (of business and branch network).
According to the bank’s business plan, the bank envisages a business mix (deposits plus advances) of Rs 60,000 crore with 771 branches by 2020.
The bank has sought regulatory forbearance for one year in opening branches in rural areas. Meanwhile, the bank has reconstituted its board with nine-directors. They include: Chhavi Rajawat, a sarpanch from Rajasthan; Kalpana Saroj-Mumbai-based entrepreneur who turned around Kamani Limited; Renuka Ramnath, founder of private equity firm Multiples; Tanya Dubash, a Mumbai-based industrialist and daughter of Adi Godrej; and Nupur Mitra, ex-CMD of Dena Bank.