Women in India account for a paltry 7.3 percent of total credit in the financial system. And, only 26 percent of women have accounts with financial institutions. If these figures have any use, it is to show how women have been neglected by policymakers.

On November 19, India took a nano-step towards correcting some of those imbalances by launching the country’s first state-funded all-women’s bank in Mumbai.

The first Mahila Bank was inaugurated by prime minister Manmohan Singh in Mumbai with an initial seed capital of Rs 1,000 crore contributed by the government. The bank is headquartered in Delhi but due to the upcoming assembly elections due for the national capital on December 4, and as a corollary the model code of conduct being in place, the branch cannot be inaugurated in the capital till the elections are over.

Explaining the need for an all-woman’s bank while inaugurating the branch, Singh said, “The sad reality is that women in India face discrimination and hardship at home, at school, at their place of work, and in public places. Their social, economic and political empowerment remains a distant goal…. The setting up of the Bharatiya Mahila Bank is a small step towards economic empowerment of women."

Singh inaugurated six other branches through video-conferencing.

UPA chairperson Sonia Gandhi, finance minister P Chidambaram, agriculture minister Sharad Pawar and others were also present on the occasion.

The bank has been designed to cater to the needs of women and promote economic empowerment. It will accept deposits and provide loans to women, or to businesses that are either managed by or make products for women.

“It aims to provide financial services to women in general and women self-help groups in particular," said Sonia Gandhi, who handed over documents to the bank’s first woman customer.

Usha Ananthasubramanian, the former executive director of Punjab National Bank who has three decades of experience working in banking sector, was appointed the first chairperson and managing director (CMD) of the bank earlier this week.

“We are looking to give 4.5 percent (interest) on savings accounts up to Rs 1 lakh and 5 percent for above Rs 1 lakh to encourage more savings,” Ananthasubramanian said. Talking about products designed especially for women, she said credit to women will be given without any collateral for small loans up to Rs 25,000.

The bank proposes to have 25 branches by the end of March 2014 and 771 branches over a seven-year period. “We are expecting business of Rs 60,000 crore by 2020…. The bank will break even in 3-5 years,” Chidambaram said at a press conference later.

The finance minister said he hopes the bank would remain not merely a symbol but emerge as a substance of women’s empowerment.

On board of directors at the new bank are Chhavi Rajawat, sarpanch of Soda village in Rajasthan; Kalpana Saroj, CEO of Kamani Tubes; Nupur Mitra, a former CMD of Dena Bank; Pakiza Samad, professor of finance and accountancy at Zakir Husain College (Delhi); Priya Kumar, director, ministry of finance; Renuka Ramnath, founder, Multiples Alternate Asset Management Private Ltd; and Tanya Dubash, ED & president (marketing), Godrej Group.

Men can also open an account in the bank, though they would not be offered all services of the bank.

The finance minister had announced setting up of the all-woman’s bank in this year’s budget speech. The blueprint for the bank was prepared by a five-member panel headed by former chairman and managing director of Canara Bank, MBN Rao.