Women’s Bank will be a regulatory headache for the RBI

The Nirbhaya Fund and the women’s bank are the ‘gender hits’ of budget 2013. Here, the UPA is quick to whitewash the remove the nonresponsive image it has cornered during the Delhi issue.

The Finance Minister’s dream about the women’s bank is that it will focus entirely on women related activities. Women-run businesses, women SHGs and women livelihood activities are the service areas of the proposed bank. Suitably, the bank employees will be women themselves. In recent years, Chanda Kochar, Kalpana Morparia etc excelled in the country’s banking sector as CEOs and heads of financial service operations.

The bank is proposed as a public sector entity and Finance Minister targets that the bank will get the license under the new licensing policy of the RBI.

Though the idea is great, at the implementation level, the entire concept becomes a difficult one especially on the regulatory aspect. How such a unique regulatory format should be designed for a single bank, is the practical problem. For example, the priority sector target is constrained to women activities. Besides, how can a bank provide services to only women customers? The availability of low customer base and services will limit the prospects of the bank.

All importantly, the regulatory framework should be uniquely drafted by inserting lot of exemptions for the realization of the women’s bank.  Existing regulations for the banking sector should be altered to accommodate the women’s bank. Hence there is less chance that the RBI may give green signal to the entity. The idea may remain as a step to escape from the Delhi issue hangover for the ruling front. It may well complement with the spirit of the Nirbhaya Fund, but not with the banking sector empirically.

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