No case for a women's bank

Probably the only time both Sonia Gandhi and Sushma Swaraj smiled in unison during the finance minister's Budget speech was when he announced the proposal to set up a "public sector bank" for women. Implicit in the idea is an intent to score brownie points and not much else.

"Can we have a bank that lends mostly to women and women-run businesses, that supports women SHGs (self-help groups) and women's livelihood, that employs predominantly women, and that addresses gender related aspects of empowerment and financial inclusion?" asked P Chidambaram. He added the government would provide Rs 1,000 crore as initial capital and hopes to get all the approvals and a banking license by October 2013.
 
Why do we need a public sector bank for women? There are already co-operative banks, such as Mann Deshi Mahila Sahakari Bank in Maharashtra and Mahila Sewa Co-operative Bank in Gujarat, doing just what Chidambaram stated. A co-operative bank is any day better placed to play this role than a commercial bank, given the much stiffer competition for the latter to both get deposits and give loans.

The government can easily achieve its objective of encouraging women entrepreneurs through the 26 existing public sector banks, which have branches across the country. State Bank of India, the country's largest bank, alone has over 14,000 branches.

If the government can hope to bring the unbanked into the banking fold with the help of these banks, what stops it from using their network to advance the cause of women? Moreover, banks reach millions of women through eight million self-help groups, of which 6.3 million are exclusively for women.

 In such a scenario, there is no strong argument to create a women's bank in the country.