The Women's Bank is a cooperative society built, owned and operated by and for poor women in Sri Lanka. It was incorporated under the Cooperative Societies law in 1991 as a District Society and upgraded to national level in 1998 as the Sri Lanka Women's Development Services Cooperative Society Ltd (Women's Bank). It is engaged in a mission to put the resources, ideas and support of its own members to solve their own problems using the cooperative principles of self-help and mutual aid.
The Bank has around 25,000 low-income members and operates in16 out of the 24 administrative districts in Sri Lanka. It has 55 Bank Branches in 6 districts to serve about 15,000 members through around 1,400 groups. In another 10 districts it has mobilized around 10,000 poor women into about 800 groups. These groups are now in the process of being federated into Bank Branches.
The Women's Bank has established a unique management structure to ensure transparency and accountability at every point of its operation. It is a bottom-up and member-focussed organisation built solidly upon a base of women's groups who in turn are clustered into bank branches which in turn are federated into a unity of elected national leaders who in turn account to the annual general meeting of the members.
The base of the Bank is made up of some 2,200 small solidarity groups called Women's Groups. These Groups have a membership ranging from 5 to 15 poor women living in close proximity to each other and who choose to come together voluntarily. They mobilize their own savings and use them to provide small loans to their fellow group members thereby enabling them to meet many of their immediate urgent day-to-day needs. An elected Treasurer known as a Group Leader manages this group fund. The other office-bearers of the group are the President and the Secretary.
The Bank Branch or Pradeshikaya is the next layer of management in the structure. It is a pool of 10 or more Women's Groups who live within reasonable travel distance of each other. The average Branch size is around 250 members. Its purpose is to address the issues that members cannot tackle at the group level. A board of directors elected from among leaders (Treasurers) of the constituent Women's Groups manages these Bank Branches. The membership of Bank Branches consists of both constituent groups and their individual members. Although the Women's Bank is a primary cooperative society, these Bank Branches are empowered through its by-laws to function as autonomous accounting units. They can enrol members, accept deposits and grant loans. They maintain their own sets of books of accounts and prepare periodical financial statements as stipulated by the Women's Bank by-laws and directed by the Bank's National Council.
At the unity or apex level the Women's Bank has the National Council and the National Executive Council. The National Council consists of leaders (Treasurers) of the Bank Branches. The National Council is responsible for making policy decisions and for all monitoring and coordinating functions of Bank Branches. Research, development, training and promotional activities also come within the purview of the National Council.
The National Executive Council is an elected body from among the National Council members and executes its decisions through the General Manager. The General Manager is the only paid officer in the entire Women's Banks set-up. The National Executive Council is responsible for preparing consolidated accounts of all Bank branches and submits them for the statutory audit done by the Department of Cooperative Development.
The Women's Bank is basically a savings (thrift) and credit cooperative society. Its loan packages range from Rs.250 (UKú1.46) to Rs300,000 (UKú1,750). In addition to providing loans it also gives the following added services to its members: Insurance scheme; Children savings programme; Welfare fund; Death donation scheme; Human resource development programme; Education fund; and Health care service.
The health care service is now in the process of promoting cooperative health centres providing facilities for every patient to be a member. Even with all these added services and geographical expansion the Women's Bank is able to maintain high levels of accountability and transparency at every point of its operation and at the same time achieve viability and maintain almost a 100 percent loan recovery rate.
Over the last 15-years the Women's Bank has periodically drawn lessons from its operations as a means of enhancing the provision of its services to its member-owners. Nine of these best practices are outlined below. The listing is not prioritised in any particular way.
1. In Sri Lanka cooperatives have been recognized since early in the 1900s as an effective tool for poverty alleviation and economic development. Out of a population of about 19 million (around 4.5 million families) some 2.9 million are members of Multi-Purpose Cooperative Societies. A further 1 million have become members of the 8,400 registered Thrift and Credit Cooperative Societies that operate mainly in the rural areas. According to recent Central Bank reports these cooperatives have mobilized rural savings amounting to Rs.12.9 billion (UKú75.4m) from their members. But they have been successful in utilising only Rs.3.5 billion (UKú20.4m) or 27 percent as loans for these members. Seventy-three percent of the funds collected have seeped out of the areas from which they were mobilized. The Women' Bank on the other hand has provided Rs.187 million (UKú109k) as loans to its members in 2003 utilising a funding base of Rs.140 million (UKú81.8k). One of the important principles adopted by the Women's Bank is to utilise funds in the same areas that they were mobilized.
2. Many cooperative societies are unable to convene a general meeting due to their inability to gather the required quorum. The Women's Bank has set up a dynamic management structure enabling it do its business with almost a 100 percent effective participation of the membership.
3. The Women's Bank has built-up a 100 percent reliable customer base. Its membership is open only to poor women who have acquired a savings and credit culture by being a member of a Women's Group. All members before being graduated to mature membership have to go through a 2-step loan process each of which has 3-loan stages. In Step 1 the members must complete 3 cycles of the loans process (Rs.250; Rs.375; Rs.500) while in Step 2 they must complete 2 cycles of the loans process (Rs.1000; Rs.1500; Rs.2000). When the members become matured after borrowing and duly settling these loans they become entitled for bigger loans depending on their entrepreneurial capacity and the resource availability of their particular Bank Branch. The normal size of a loan given by a senior Bank Branch is around Rs.300,000 (UKú1,750).
4. The Women's Bank does not seek any collateral for any loan except the solidarity group guarantee. As groups become responsible for all loans given to their particular group members the Women's Bank has no problem of recovering them. It has almost a 100 percent recovery rate.
5. The Women's Bank does not undertake any business other than savings (thrift), credit and member promotional activities.
6. The Women's Bank provides loans for any socially acceptable purpose such as sickness, marriages, funerals, meeting social obligation, education or redeeming external loans including pawned goods, etc.
7. The Women's Bank does not depend on subsidies or handouts.
8. It does not deposit member's money in any outside institutions or banks. One important technique used in the Women's Bank system is to keep its cash balances to the minimum level. Its funds are always in circulation being used by one or another of the members.
9. Although the Women's Bank charges interest of 24 percent it is paid back to the members as interest on their savings and the redistribution of excess income over actual costs. Thus the Women's Bank's effective interest rate has become not 24 percent but between 6 to 7 percent.
Nandasiri Gamage is the General Manager and Justin Keppetiyagama is a financial advisor to the Bank. E-mail: email@example.com Tel: 94 1 2681 355
Exchange Rates: Rs100 = UKú0.58435 (31/12/2003)
For further information see: Our Money Our Movement: Building a poor people's credit union, Alana Albee and Nandasiri Gamage, ITDG Publications, London, 1996. ISBN 1853393386
Real Voices in Development - A Hundred Stories of Women's Bank Members
Women's Credit Union of Sri Lanka http://www.caledonia.org.uk/realvoices.htm#credit