A bank by women and for women

Indian politicians and civil society applauded when federal Finance Minister P Chidambaran announced a couple of months ago the decision to set up an all-women public sector bank for the purpose of empowering women.

But amid the applause, what was perhaps surprisingly overlooked was that a similar bank doing precisely the same had been around in the state of Assam in India’s remote northeast.

The Konoklota Women Urban Cooperative Bank, which started under the leadership of 64-year-old Lakhimi Baruah, is one where women are treated as prized capital. Women make up for the majority of its account holders – 25,000 out of the total of 28,000. They are also the ones entitled to buy the bank’s shares and take loans.

“I had worked at a bank till 1990 myself and I was always aware about the difficulties faced by women, especially poor, deprived and illiterate women in banking. When I started the bank my vision was to empower such women, and today when I look back I feel that I have been able to contribute towards women empowerment in some way,” Baruah says.

Baruah, who is currently associated with the bank as the managing director, has been instrumental in the bank’s growth and today it has a working capital of over Rs 7 crores, has three functional branches, with two more being planned.

Egged on by its past success, the bank is thinking big: it has written to the government for permission to set up at least one branch in all the 27 districts in the state.

The bank’s USP is its women-friendly approach and each of its branches register about 250 customers every day.

“This bank is unlike other banks where illiterate women like us are turned down and are not provided any assistance. Here the bank employees are very welcoming and they help us at each and every step, including filling up withdrawal forms, and we just put our thumb impression,” said Phulmoni Karmakar, an illiterate woman who works as a daily wage labourer in a tea garden getting a daily wage equivalent to less than a dollar a day.

“I have learnt banking and how to save money, and this will help me a lot to become financially secure soon,” said Karmakar.

Empowering women financially

The customers also get attracted by the very low minimum balance which is required in savings accounts in this bank –just Rs 100 ($1.6), compared to Rs 1,000 ($16) in the bigger banks.

“There are people in the state who get pension — such as old-age pension, of less than Rs 100 a month, and for such people it is near impossible to open an account in bigger banks and they come to us,” Baruah says.

Apart from playing the role of an institution educating illiterate and marginalised women about banking and encouraging them to open accounts and save, the bank has also managed to empower over 5,000 women financially by offering them support to start small entrepreneurship activities.

After her busy schedule in the bank, Baruah even finds time to organise meetings to spread awareness about banking and financial empowerment of women.

After listening to her, even girl students from the tea garden areas have now come forward to do banking — which is something rare in the tea garden areas in the state.

“Since our vision is in empowering women, we strongly believe that it is important to offer them support and guidance so that they can become financially independent — for this we give loans at very small interest rates to women who are interested to start entrepreneurial activities and over the years thousands of women have been benefited,” Baruah said.

“Our interest rates are lower than the bigger banks,” she adds.

The bank officials also ensure that loans are sanctioned within stipulated timeframe, and even help the customers in doing the formalities for the loan application.

“The stipulated timing for sanctioning of a small loan of around Rs 2,000 ($32) is a few hours, and a slightly bigger loan of around Rs 50,000 ($803) takes about a week, moreover we help the customers in filling the forms and documentation.This quick sanctioning of loans has not affected our loan recovery — which is over 93 percent,” said Lakhi Rani Agniborah, branch manager of the Jorhat branch of the bank.

‘Never knew about loans’

Trishna Neog, a 42-year-old woman, vouches for the bank’s efficiency. She had taken out loans twice from the bank, and on both occasions it was quick and hassle free.

Neog today runs a small livestock farm and is able to save over Rs 15,000 ($241) a year and moreover she is able to financially support her husband who runs a small tyre shop in the town.

My life has changed considerably after I came in touch with this bank, and today I know how to do banking, to do savings

by Trishna Neog, Konoklota bank customer

“I never knew about loans, and I was never aware that banking is so easy. My life has changed considerably after I came in touch with this bank, and today I know how to do banking, to do savings, and also how to avail loan facilities. I plan to go for a bigger loan once I clear the existing loan and then set up a bigger business,” said Neog.

But some feel that Baruah and the bank could do better.

Nirmala Borah, a professor of economics of the JB College in Jorhat had done a study on the bank, and she pointed out that the bank needed to be more aggressive in lending and asset building, and should also go for publicity drives.

“The bank has been able to absorb a huge number of illiterate people whom almost none of the big banks actually want, and besides this it has been able to help thousands of women by giving out small loans. However to grow the loan amount has to be bigger, and it is important to note that to grow the bank needs to be profit oriented,” said Borah.

It is a valid suggestion that the bank needs to take note of. But for the moment, its women customers are not unduly perturbed, as they literally laugh their way to the bank, happy as they are with its service.

This feature is a part of our ongoing special India coverage. To read more stories click here.