Skip to main content

Banker for poor who hopes to bounce back from pandemic fallout


By Moin Qazi*
Finance is one field where we have witnessed significant innovations in recent decades, and this has transformed our society in many ways. Earlier, we could hardly visualise social change in rural India as it was mired in caste conflicts and was impervious to the winds of change. Before the 1980s, outsiders rarely visited villages. Those who did were the occasional anthropologist, extension staff, social workers and missionaries of various religions. The gradual change in the profile of visitors was the first sign of the embryonic revolution in development finance, which later bloomed into an era of social banking.
It was during this time that bankers started courting villages in large numbers. Their mission was to find trustworthy villagers for providing soft credit to rescue them from moneylenders. This, it was thought, would help villagers start small businesses, promote local economic activities and empower people to climb out of poverty.
The bankers and missionaries, who shared much of the same client pool, were curiously alike in some ways. Usually outsiders to the local community, they tended to discover their own preconceptions in the villages, rather than being able to grasp the local realities and dynamics. Although the missionaries succeeded, the financial revolution was inevitably aborted by populist politicians and local interests. However, soon it became clear that financial inclusion was not just a powerful economic tool but a critical piece in the development ecosystem, and it could no longer be deferred. The Government, too, was keen to lend its full weight.
Committed development organisations, too, saw an opportunity and space and plunged into the field. Among the early bands of development activists who climbed on board was Chetna Sinha, a trained economist. She set up the Mann Deshi Mahila Sahakari Bank in 1997 at Mhaswad village in Satara district of western Maharashtra. As many as 1,335 women pooled their savings (Rs 7.8 lakh) and set up the first bank for and by rural women in India.
An intrepid lady got an opportunity to join this fledgling institution as an assistant and, with sheer commitment, rose to helm it. She is Rekha Kulkarni who is now the bank’s most visible face. The bank opened at a time when an institution of this type could not have been thought of even by established bankers. Today it has eight branches, 2,00,000 account holders, 30,000 shareholders and has given out loans to the tune of Rs 500 crore. The balance sheet is modest but the model has been applauded by organisations like the Reserve Bank of India (RBI) and the Harvard Business School.
Rekha is the first woman graduate from her village of Shirgaon in Belgaum district in Karnataka. In September 2000, her husband, a retired radar fitter from the Indian Air Force, was struggling to find a stable job. Rekha applied to the Mann Deshi Bank for a job and was hired by Chetna. She turned out to be a great bet. Within six months, she rose to become a branch manager and six years later she became the CEO of the bank. She is part of the faculty at the RBI’s College of Agricultural Banking in Pune. She has travelled to Europe and the US to explain the bank’s model and spoken at Harvard and Yale.
Both Chetna and Rekha knew that without a safe place to save money, it was hard for the poor to take the calculated risks they needed to take to better their lives. While Chetna went about formulating the larger vision, Rekha and the remaining cohort worked on laying the long-term groundwork for the bank.
Both were assailed by several challenges and the bank was expected to address them. However, the benefits of financial inclusion were becoming clear: Affordable credit could help low income populations to build assets and get a business idea off the ground. Appropriately-designed insurance could equip them to buffer their lives against economic shocks such as unemployment, illnesses and disasters.
Financial services are analogous to safe water, basic healthcare and primary education. They are essential to enable people to participate in the benefits of a modern, market-based economy. Ideal financial societies are those which provide safe and convenient ways for people to navigate their daily financial lives. It was such a society that Mann Deshi bank envisioned for its clients — one that was equitable, adaptable, sustainable and more resilient. The bank had a clear credo: It was not to be a clone of a stereotyped conventional bank, but a bank for poor women to be run by them; and its entire structure was conceptualised accordingly. Mann Deshi considers women as a distinct segment with unique challenges, concerns and goals. So, instead of disguising male-focussed products as gender neutral, the bank created specific products tailored to their specific needs.
“We need to study the myriad social and behavioural impediments impacting women, and use this knowledge to design customised financial product offerings. In failing to develop client experiences rooted in men and women’s fundamentally-different perspectives on finance, banks are missing a very significant business opportunity,” believes Rekha. Women don’t have a straight financial journey and have more interruptions and life-stages in their financial lives. Low- income women usually need timely and hassle-free credit to increase their financial prospects. “The greatest fracture facing India is women’s inequality”, reiterates Rekha. “A majority of women are doing business on roads in cities and villages, selling products in markets but they do not have access to affordable credit. Regular banks aren’t typically an option. They have several formalities and fees that can be intimidating. Plus it requires an arduous trek to the nearest town, which can compromise a day’s wages. Banks also find this segment unviable because the costs of underwriting and originating these small loans are substantial,” she says.
Behaviourally, women customers take more time to develop trust in a new product or service. The same holds good for finance and building confidence and trust in them requires more interaction. Rekha felt that her team needed to address the barriers to financial inclusion of women through behavioural and reformist approaches instead of the usual hardware-based one, so that both demand and supply-side were eliminated.
It’s not that the barriers are necessarily different for rural and urban women, but the same challenges are greater for rural ones. “We need last-mile banking agents to help mitigate barriers that prevent universal inclusion of women in the formal banking system, such as dependency on male family members for travel,” emphasises Rekha. The bank has developed another novel idea that is known as the wealth card, which lists out the client’s assets and can also include cattle or machinery, depending on the business. The wealth card is a barometer of the customer’s net worth.
Chetna, as the bank’s founder, has all along emphasised two very important mantras. The first: Never provide poor solutions to poor people. Second: invest in women. The Mann Deshi Bank was an early embracer of modern financial tools and came up with a slew of sophisticated products and services so that poor women could enjoy the same fruits of financial inclusion as the clients of mainline banks.
As the Mann Deshi team seeks to comprehend the new normal following covid-19, it faces many unknowns. Will the clients regain their businesses? What will recovery look like? Much is still a question mark. But the greatest hope is the tenacity and resilience of the women. Fragilities and vulnerabilities may be woven into their daily lives, yet they have consistently shown they can cope. Both the bank and the clients hope to bounce back from the pandemic’s economic fallout.

*Development expert

Comments

TRENDING

CAG’s audit report creates a case for dismantling of UIDAI, scrapping Aadhaar

By Gopal Krishna  The total estimated budget of the biometric UID/Aadhaar number project and its cost: benefit analysis has not been disclosed till date. Unless the total estimated budget of the project is revealed, all claims of benefits are suspect and untrustworthy. How can one know about total savings unless the total cost is disclosed? Can limited audit of continuing expenditure of Unique Identification Authority of India (UIDAI), an instrumentality of Union of India be deemed a substitute for total estimated budget of the biometric UID/Aadhaar number project of UIDAI? It has been admitted by CAG that the audit of functioning of the UIDAI is partial because of non-transparency. The report of the Comptroller and Auditor General (CAG) of India arising from performance audit of functioning of the UIDAI for the period from 2014-15 to 2018-19 is incomplete because it is based on statistical information “to the extent as furnished by UIDAI” upto March 2021. There is also a need to compa

Women for Water: WICCI resource council for empowering women entrepreneurs, leaders

By Mansee Bal Bhargava*  The Water Resources Council of the Women’s Indian Chamber of Commerce & Industry is formed for 2022-24. A National Business Chamber for Women, the Women’s Indian Chamber of Commerce & Industry ( WICCI ) is a premier association empowering women entrepreneurs and leaders in all walks of life through advocacy, pro-active representations to government, implementing projects for women via funds allocated by various government agencies and corporates, plus bringing awareness on all issues that concern women. WICCI boosts and builds women’s entrepreneurship and businesses through greater engagement with government, institutions, global trade and networks. WICCI enables fundamental changes in governmental policies, laws, incentives and sanctions through proper channel, with a view to robustly encourage and empower women in business, industry and commerce across all sectors. WICCI is supported by the massive global networks of ALL Ladies League (ALL), Women Eco

75 yrs of water in India: whither decentralised governance to sustain the precious resource?

By Shubhangi Rai, Megha Gupta, Fawzia Tarannum, Mansee Bal Bhargava Looking into the last century, water resources management have come a long way from the living with water in the villages to the nimbyism and capitalism in the cities to coming full cycle with room for water in the villages. With the climate change induced water crisis, the focus on conservation and management of water resources if furthered in both national and local agenda. The Water management 2021 report by NITI Aayog acknowledges that water and sustainability are of immense importance for the sustenance of life on earth. Water is intricately linked to the health, food security and livelihood. With business as usual, India’s water availability will only be enough to meet 50% of its total demand and 40% of the population in India will have no access to drinking water and sanitation by 2030 . Its Composite Water Management Index 2021 states that ‘India is suffering from the worst water crisis in its history and mil

Grassroot innovations in water management: Policy challenges amidst climate change

By Shubhangi Rai[1], Megha Gupta[2], Mansee Bal Bhargava[3] India despite of having a vast traditional water management history continue to struggle with water crisis from disasters like floods and droughts but more with social distress leading to asymmetric access to water goods and services. The rising water crisis in a country that is abundant in water resources and wisdom is worth questioning and resolving. The knowledge that was passed on by our ancestors who used a diverse range of structures that helped harvest rainwater locally besides replenish and recharge the groundwater along the way. Formal and informal rules were locally crafted by the community on who to use the water, how much to use, when to use, how to penalise for misuse, how to resolve conflicts and many more. As a nation, we need to revive our dying wisdom of the traditional water management systems and as water commons, enable the governing mechanisms towards sustainability. In the session on ‘ Grassroot Innovatio

Need to destroy dowry, annihilate greed and toxic patriarchy in India

By IMPRI Team Talking about an evil ever-persistent in our society and highlighting the presence of toxic patriarchy, #IMPRI Gender Impact Studies Center (GISC) , IMPRI Impact and Policy Research Institute, New Delhi organized a panel discussion on Destroy Dowry: Annihilation of Greed and Toxic Patriarchy in India under the series The State of Gender Equality – #GenderGaps on May 4, 2022. The chair for the event was Prof Vibhuti Patel, Former Professor, Tata Institute of Social Sciences (TISS), Mumbai and a Visiting Professor, IMPRI. The distinguished panel included – Asha Kulkarni, General Secretary at Anti Dowry Movement, Mumbai ; Kamal Thakar, Sahiyar Stree Sangathan ; Adv Celin Thomas, Advocate at Celin Thomas and Associates, Bengaluru; Shalini Mathur, Honorary Secretary, Suraksha Dahej Maang Virodhi Sanstha Tatha Parivar Paraamarsh Kendra, Lucknow and Secretary, Nav Kalyani Foundation, Gender Resource and Training Centre; and Dr Bharti Sharma, Honorary Secretary, Shakti Shalini

Impact of climate change on Gujarat pastoralists' traditional livelihood

By Varsha Bhagat-Ganguly, Karen Pinerio* We are sharing a study[1] based learning on climate resilience and adaptation strategies of pastoralists of Kachchh district, Gujarat. There are two objectives of the study: (i) to examine the impact of climate on traditional livelihood of pastoralists of Gujarat state; and (ii) to explore and document the adaptation strategies of pastoralists in mitigating climate adversities, with a focus on the role of women in it. In order to meet these objectives, the research inquiries focused on how pastoralists perceive climate change, how climate change has impacted their traditional livelihood, i.e., pastoralism in drylands (Krätli 2015), and how these pastoral families have evolved adaptation strategies that address climate change (CC)/ variabilities, i.e., traditional livelihood of pastoralists of Kachchh district, Gujarat state. Pastoralism is more than 5,000 years old land-use strategy in India; it is practised by nomadic (their entire livelihood r

Russia’s invasion of Ukraine: Implications for India and emerging geopolitics

By IMPRI Team In the backdrop of the ongoing conflict between Russia and Ukraine, #IMPRI Center for International Relations and Strategic Studies (CIRSS) , IMPRI Impact and Policy Research Institute, New Delhi hosted a panel discussion on Russia’s Invasion of Ukraine: Implications for India and Emerging Geopolitics. The event was chaired by Ambassador Anil Trigunayat (IFS Retd.), Former Ambassador to the Hashemite Kingdom of Jordan, Libya, and Malta; Former Deputy Chief of Mission, Embassy of India, Moscow. The panelists of the event were Prof Waheguru Pal Singh Sidhu, Clinical Professor, Center for Global Affairs, New York University; H.E. Freddy Svane, Ambassador, Royal Danish Embassy, New Delhi; Maj. Gen. (Dr) P. K. Chakravorty, Strategic Thinker on Security Issues; and T. K. Arun, Senior Journalist, and Columnist. Ambassador Anil Trigunayat commenced the discussion by stating the fact that wars are evil. He opines that no war has ever brought peace and prosperity to any country and

Making Indian cities disaster, climate resilient: Towards actionable urban planning

By IMPRI Team  Three-Day Online Certificate Training Programme on “Making Indian Cities Disaster and Climate Change Resilient: Towards Responsive and Actionable Urban Planning, Policy and Development”: Day 1 A three day Online Certificate Training Programme on the theme “Making Indian Cities Disaster and Climate Change Resilient: Towards Responsive and Actionable Urban Planning, Policy and Development”, a joint initiative of the National Institute of Disaster Management (NIDM) , Ministry of Home Affairs, Government of India, was held at the Centre for Habitat, Urban and Regional Studies at IMPRI Impact and Policy Research Institute, New Delhi. Inaugurating the session Ms. Karnika Arun, Researcher at IMPRI, welcomed the speakers and participants to the program with an introduction to the eminent panellists. Day 1 of the program included Prof Anil K Gupta, Head ECDRM, NIDM, New Delhi and Mr Tikender Singh Panwar, Former Deputy Mayor, Shimla; Visiting Senior Fellow, IMPRI as conveners, an

Gender gap: Women face disproportionate barriers in accessing finance

By IMPRI Team Women worldwide disproportionately face barriers to financial access that prevents them from participating in the economy and improving their lives. Providing access to finance for women is crucial for financial inclusion and, consequently, inclusive growth. To deliberate and encourage dialogue and discussion for growth, the Gender Impact Studies Center (GISC) of IMPRI Impact and Policy Research Institute, New Delhi, organized a web policy talk by Mr S. S. Bhat, Chief Executive Officer Friends of Women’s World Banking India, Ahmedabad on ‘Access to Finance for Women’ as a part of its series The State of Gender Equality – #GenderGaps. The session was started by the moderator, Chavi Jain, by introducing the speaker and the discussants and inviting Prof. Vibhuti Patel to start the deliberation. Importance of access to finance for women Prof. Vibhuti Patel, Visiting Professor, IMPRI, New Delhi; Former Professor, Tata Institute of Social Sciences (TISS), Mumbai, began by expre

Hindutva patriotism: State-sponsored effort to construct religion-based national identity

By Harasankar Adhikari Rabindranath Tagore (1908) said, "Patriotism can’t be our final spiritual shelter. "I will not buy glass for a diamond, and I will never let patriotism triumph over humanity as long as I live." Tagore’s view stands in sharp contrast to what we are witnessing today, when patriotism means religious differences between the majority (Hindu) and minority (Muslim). Our secular nation is gradually disobeying its secular nature and it is being patronised by political leaders and their narrow politics. India’s unique character of ‘unity in diversity’ is trying to be saffronised. Hindu extremism (Hindutvavadis) generates a culture of religious intolerance. Democratic India is based upon the ideology of equality of all. This nation is based upon different foundations than most of those which went before it. Its legitimacy lies in its being able to satisfy its various component communities that their interests will be safeguarded by the Indian state