“How much ease can we create?”: Developing financial solutions for rural women
Mann Deshi Bank is the first co-operative bank for women in rural India.
When you first founded your bank by and for rural women, the Mann Deshi Mahila Sahakari Bank, your application was initially rejected. What did you learn from this experience?
I never thought I would start a bank. But women came to me and they said they wanted to open a savings account. One woman blacksmith was insistent that she wanted to save to buy a tarpaulin cover for the rain. The banks were not ready to let her open an account because she was saving such a small amount. She was not asking for a loan or grant or subsidy – just a safe place to save. I thought, “Why not start a bank for women?” When we applied, we were rejected because some of the women in our group were not literate. So we started literacy classes. We applied again after seven months. These women accompanied me. When we went to the Reserve Bank of India, the women challenged the officers: “Ask us to calculate the interest of any amount.” They proved their financial literacy. We were the first bank to start a pension fund. From the beginning, we designed products for women’s enterprises. We have impacted about 600,000 women’s enterprises.
What do you see as the main challenges faced by women entrepreneurs in securing funding for their small businesses in India?
The obvious answer would be that even though microcredit is a multibillion dollar industry, women who are entrepreneurs are not getting the capital. What is stopping them from giving capital to women? Women are trying hard to make themselves bankable, but bankers are not prepared, because traditionally, women do not have collateral. Previously, a group guarantee would make bankers comfortable, but there is no group guarantee when women advance from microcredit loans to larger micro-enterprise loans. The banking industry should have built their own ecosystem for experienced clients, so they could move from micro-credit to microenterprise, but this has not happened.
Women do not have collateral; they do not have property rights. But what are the other things that can suffice? Do they have a digital account? Can you understand their cash flows? Can you understand their market share? At Mann Deshi Bank, we created accounts where women can get loans based on other foundations. We also have an app, and rural women were able to request digital payment from their clients – many milk vendors did this. My question would be, “How much ease can you create for these women? Because their life is tough.” Creating trust is very important. If you want to finance the small enterprise, it is very important for the financial sector to do their homework – to understand the challenges and create the right products for small enterprises.
The Mann Deshi Foundation provides business school and financial literacy classes for rural women. Do you encourage women entrepreneurs to enrol in business classes when they seek out funding from your bank?
First, when the bank was started the foundation was also registered, but we did not know exactly what we wanted to do. The women were very clear that they wanted to be cautious about their spending. We decided to provide three levels of financial literacy classes. All women who go to the bank receive basic financial literacy training. After training they receive access to the ATMs and other services. In order to get a loan, they take advanced financial literacy training. We do a lot of customization of products because we don’t want to design a product that is designed for the ease of the banker; it should be designed for the ease of the client. According to their cash flow, we help to design their repayment system. Once they repay two cycles of loans, they can do the Deshi MBA, which is a full package that helps microenterprise, with financial and marketing skills; even advertising and help with e-commerce are included.
You also introduced doorstep banking services for women who could not miss work to visit the bank. Did these services become even more important during the Covid-19 pandemic?
These women do not have the luxury of spending the whole day visiting the bank. In 1997 we started doorstep banking through female field officers, who also earned a commission for providing banking services. The key thing was trust. One thing I’ve learned is that women don’t just talk about access to finance, they also talk about control of their money. If they want to control the money, they need a smartphone, so we helped to provide these services. I strongly advocate that they need to have a digital source of money. We also have “last mile digital didis,” meaning digital sisters, who help clients learn how to use digital products. There is a network of sisters, so one trainer can cover 700 women. At Mann Deshi Bank we created a digital product where you get an immediate loan. During the pandemic, rural women needed working capital in small amounts. These had to be repaid digitally. Ninety percent of our loans taken by rural women in India have been repaid digitally.
What are the next projects you have in mind? Are you creating new financial products?
That is a very important question. In India, less than fourteen percent of women get loans. We decided to focus on women-owned businesses, and for them, finance is the biggest challenge. We decided to design credit and investment products, in partnership with the big banks. We went to these banks and asked them what their biggest pain was. They said it was determining their bank flows and credit rating. We helped to provide alternative credit rating tools for women. We are risk sharing with these banks to provide a toolkit for women entrepreneurs. Alternative credit rating tools are very important because we have to create an ecosystem where lenders feel comfortable and women can increase their credit rating to build their businesses.
What advice do you have for female entrepreneurs who are just starting out and looking to finance their business?
I would say to women business leaders and entrepreneurs, “You are going to lead this.” Don’t shy away but say we are bankable and investable. They may not talk about their big balance sheets, but they will show that their performance is ready for investment. The time has come now for women business leaders to also invest in women. The whole issue of women-owned businesses has to come center stage. Get women on corporate boards, not because of quotas, but because they will redesign the parameters of performance.
Is there anything else you would like to add?
I like to share my experiences with community leaders. In 2018 when I was invited to co-chair the World Economic Forum in Davos, I explained this to community women who are involved in the bank. One of the women said, “Go and tell them our courage is our capital.” They were so clear. That was the key, for me to take it forward. We have reinvested our dividends in the institution itself, because we wanted it to be strong. It is the idea that whatever profit you get, you invest in your environment. It’s about investing in your roots and then you will get the returns.