Why a Women Credit Cooperative Bank?

Various studies have shown that women are the last to be covered by any kind of organized financial service. In fact, the bulk of women's economic activity is considered non-productive. So, they are not able to access the banking system even to make a deposit let alone avail credit facilities from it. This also explains the low percentage of credit facility availed by women in our State.

Meeting the credit needs of women to help them set up their micro enterprises is the best strategy to empower them besides graduating them to entrepreneurship. In India including our State, gender disparity, despite efforts from various quarters, continues to persist and plague our society. It assumes significance since women constitute about 50% of the population. They make up one third of the labour force at the national level as against 47% in the State. The following tables give a brief look at the status of women in J&K based on census 2001.

Population

Sex Ratio

i.e for every 1000 males proportionate ratio of females is1000: 900

Literacy Rate (Percentage)

Workers Classification

Although, the data regarding flow of credit to women is not available, it is estimated that about 20% credit under Govt. Sponsored Schemes goes to women. The banks with Women Development Cells set up by the following banks with the financial assistance from NABARD, provide the following data on coverage of women entrepreneurs (As on 31st March, 2003):

Share of women entrepreneurs in credit disbursement

·        since inception of WDCs                                            Source: NABARD Focus paper

The above table shows how poorly the women in our State are covered by banks. Inability of women entrepreneur to provide collateral security is depriving them of credit facilities from the banks. It seems that the existing Banks show little interest in financing women, even in case where no securities are required.

Besides, women by tradition feel reluctant in visiting banks as their staff structure is male dominated. The figures shown in the above table indicate the fact that women being about approximately 50% of the population are not represented in disbursal of loans advanced by these Banks. On the other hand, NABARD has estimated the credit requirement of women in J&K in 2004-05 as Rs. 1555 lac. Thus a strong point towards having an independent woman- dedicated credit institution in the State.

What are the Objectives of this Women Credit Cooperative?

The basic objective of an exclusive women financial institution is that it can cater to the financial requirements of women belonging to all sections of society. Any sociologist will vouch for the fact that even in rich families of urban/rural areas, women have negligible role in decision making especially in financial matters, well educated and professionally trained rich women are also not able to take decisions about their future because they too lack financial empowerment. Therefore, it is absolutely necessary that a women financial institution having women friendly attitude is created.

While, this exclusive institution takes care of the financial requirements of women belonging to rich section of society, it can never exclude the majority of women belonging to middle, poor classes and also those below poverty line. The world over, women banks and credit Societies have been created with a focus on these sections of Society. The legendry "SEWA" model at Ahemadabad was created for the sole purpose of helping the poor ladies help themselves. No women Cooperative bank/credit society would be serving the cause of women if it does not include 'micro credit' in its aims and services. Thus micro financing would be an essential part of the objectives of this Women Cooperative Bank.

What is micro credit?

Micro credit is defined as provision of thrift, credit and other financial services and products of very small amount to the poor in rural, semi-urban for enabling them to raise their income levels and improve living standards.

What is unique about a Women Credit Cooperative/ Bank?

I. Apart from setting an example of an all-women cooperative enterprise, it will also develop entrepreneurship among women to become self-reliant and thus lead to attainment of income security and ownership of productive assets by them. For example, Bhagini Nivedita Cooperative Bank, the winner of State and National Excellence Awards, apart from usual banking services also provides exclusive services like holding regular workshops for women customers to promote entrepreneurship among them and give proper guidance to run their business. Women, who are interested in starting some enterprise can meet the Board members on a particular day and get guidance. The Bank also holds exhibitions for women entrepreneurs where their good and products are sold on large scale and they get marketing exposure coupled with reasonable profits.

II. A women cooperative bank can also cater to the special needs of women in a better way. For example, Mahila Utkarsh Nagrik Sahakari Bank Ltd., a leading all-women bank in Ahmedabad offers special services to women which are as under:

1. Unsecured loans up to Rs 1500/ for special occasions, cottage and small industries, education and contingencies.
2. Vehicle loans for vehicles to be used for attending business places etc.
3. Hypo loan for purchase of domestic articles, refrigerators, T.V., other consumer goods etc.
4. Housing loan for purchase of residential building, office building, factory shed etc.
5. Speedy gold loans against gold ornaments.
   

The focus would be on channelising the unproductive investments made by women in clothes, utensils, silver and gold items etc into productive savings. It is a tendency very commonly seen among women belonging to poor and middle classes that they keep on spending their hard earned savings in buying clothes and other household items for the marriage of their daughters, which become outdated by the time they are to be married off. Thus, a major chunk of their otherwise paltry savings is virtually wasted which can be productively saved through an organized women financial institution like a women credit cooperative.

It is pertinent to mention that studies have proved that women borrowers make productive use of credit for self employed micro enterprises/small farms and are prompt in repayments, with average repayments rates above 90%, much better than recoveries under normal lending. This will ensure growth of the Women Cooperative Bank into a viable institution.

At the end, it may also be added that the experience has confirmed that a specialized institution like a Women Cooperative Bank performs better. This is possible because there is undivided attention and pointed focus on their declared objectives which in this case would be providing better credit facilities suiting the requirements of its exclusive women clientele.

How will this Women Cooperative Bank be formed?

In order to fulfill the objective of setting up a woman Cooperative Bank, it is essential to register it first as a credit cooperative in view of stringent RBI entry point norms. As per these norms, a women Bank can be registered only after it has collected Rs 2 crore as share capital and has a minimum of 3000 members. Such conditions don't apply to a credit Society. Moreover, there is an embargo announced by the RBI on registration of any kind of Cooperative Banks. However, credit facilities can be provided to women through a Women Credit Cooperative. After the registration is done under the Self-reliant cooperative Act, 1999, by the Registrar, Cooperative Societies and the society starts functioning, expands business and finally is able to satisfy RBI norms, it will be converted into a Bank. This may also be clarified that the one basic difference between a Bank and a Credit Society is that the latter can take deposits from and do loaning to its members only. Thus it is important that the membership base of the society is broad based. It is an appeal to women belonging to all sections of society to take the membership of this credit cooperative for their common good.

How to become a member?

For becoming a member, you have to purchase 10 shares of Rs. 100/- each and pay membership fee of Rs 100/- thus totaling the amount to Rs. 1100/- per member. You will have to fill up a membership form and deposit Rs.1100/- per member against proper receipt. The amount thus deposited by you shall be kept in the Principal saving A/c No: 15901 in the name of the proposed Women Cooperative Bank with the Jammu Central Cooperative Bank, Parade branch. In case of places other than Jammu, all amount collected in this behalf shall be deposited with any branch of Jammu Central Cooperative Bank which shall finally reach the principal A/c No: 15901 at JCCB, Parade, Jammu through remittances. In Kashmir division, such amount shall be deposited with the branch of J&K State Cooperative Bank, Red Cross Road, Srinagar in Saving A/c No: SBS/303/4.

Is there any special concession in the share value for poor women?

Micro finance cannot be provided to poor ladies through a credit Society if they are not its members. Share value of Rs. 1000/- may be a deterrent in this. Solution to this is that such women can be organised in SHGs (Self Help Groups). Self Help groups of 10 ladies each belonging to poor sections of society shall be formed. This SHG shall take one membership. In fact, the whole idea is an improved version of small kitties/committees which are very popular among ladies belonging to all sections of society.

What are the advantages of financing through SHGs?

An economically poor individual gains strength as part of a group. Besides, financing through SHGs reduces transaction costs for both lenders and borrowers. While lenders have to handle only a single SHG account instead of a large number of small sized individual accounts, borrowers as part of a SHG cut down expenses on travel to and from the branch and other places for completing paper work and on the loss of workdays in canvassing for loans.

What will be the organizational structure of this Credit Cooperative?

All shareholders together shall form the General Body of the Credit Cooperative and shall elect 10 members to form the Board of Management, including a Chairperson and a Vice-Chairperson, which will run the affairs of the Society for a period of three years as per the J&K Self-reliant Cooperative Act of 1999. After the expiry of this tenure, fresh elections shall be held. At all times, the Board of this cooperative shall have two members who have practical banking experience. To begin with, immediately after the registration is done by the Registrar, Cooperative Societies, a Board of Management shall be nominated to manage the affairs of the Credit Cooperative for a period of one year after which elections shall be held for the constitution of an elected Board.

Under what legal framework would this Credit Cooperative work?

This Credit Cooperative would be registered under and governed by the Self Reliant Cooperative Act, 1999. The said Act allows complete freedom to the Cooperatives registered under it to run their affairs. Besides, all activities of the credit cooperative shall be governed by a set of rules and regulations in the form of its Articles of Association besides other relevant laws.

How will the recruitment be done in this Credit Cooperative?

There shall be a post of Chief Executive Officer for which a well qualified woman of unimpeachable integrity and competence shall be selected for a period of three years. The CEO shall draft recruitment rules and Business Development Plan for the Credit Cooperative which shall be discussed and ratified by its General Body.

How will this Credit Cooperative function?

In Jammu division, branches at three district headquarters at Jammu, Udhampur and Kathua shall be opened in the beginning. In Kashmir division, branches shall, in the beginning, be opened at Srinagar, Anantnag and Baramulla. In course of time and on the basis of volume of business being conducted in an area, new branches shall continue to come up. These shall also be opened on the basis of membership. Any area having 500 members shall be considered for setting a branch.

What will be the financial resources of this credit Cooperative?

a. By issuing shares
b. By obtaining deposits
c. By raising loans
d. By securing Govt. assistance in any form
e. By receiving donations
f. By entrance fees
g. By issuing cash certificates

What will be the Services offered by this Credit Cooperative?

1. Loan for enterprises owned and run by women members.
2. Loan for vocational trainings/education/marriage of the girl child.
3. Housing loan for purchase of residential building, office building, factory shed etc
4. Loan for purchase of vehicles, domestic appliances like refrigerators, T.Vs and other consumer goods.
5. Unsecured loans up to Rs.25,00 /- for special occasions and contingencies.
6. Speedy loans against gold ornaments.
7. Consultancy service for women entrepreneurs
8. Lockers facility.

What will be the contribution of this Credit Cooperative in the empowerment of women?

All socio-cultural factors notwithstanding, financial empowerment of women is the most important determinant in deciding the status of a woman within her own family and in her social circle. This Credit Cooperative will be an exclusive woman financial institution specially created for fulfilling the credit requirements of women entrepreneurs, consumption needs of all women and also reducing tensions of their social responsibilities like education and marriages of their children by providing special loans for such purposes. Not only this, a special Consultancy Cell shall be created in it to provide guidance to women interested in availing any kind of loan and also all possible support to women entrepreneurs in making their ventures successful. Having such a friendly financial institution shall strengthen the confidence of women and of their family members in their innovativeness and enterprising abilities. This will ultimately contribute towards building a conducive atmosphere for women willing to start their own ventures and will also help in the enrichment of the quality of women's life.

The Unique Selling Point (USP) of this credit cooperative would be that right beneficiary would get finance at the right time and emphasis would be on empathetic treatment, easy procedures and quick services.

For further enquires, please contact Officers In-Charge:

Ms. Anuradha Office Incharge Jammu Women Credit Cooperative C/o Registrar, Cooperative Societies Mubarak Mandi, Jammu Telephone: 0191-2575628	Download form
Ms. Shahida Khanam Office Incharge Kashmir Women Credit Cooperative C/o Registrar, Cooperative Societies 110, Wazir Bagh, Srinagar Telephone: 0194-2312769	Download form