The Women's Bank in Sri Lanka

The problem

The indebtedness of the poor is one of the main features of low-income settlements. An unstable income is common to all employment in the informal sector. As a result, even the feeding of the children becomes a problem and drives women into debts for survival. At times, there is no money for the bus to go to work; and how far can one go on an empty stomach. In the case of illness of one of the children, a mother has to go to the money lender, before she can go to the doctor. Children drop out of school, because the family cannot afford to buy the school books. A death in the family is another reason to go and borrow money; even for weddings and other ceremonies, the money lender is the saviour. However, the money lender gives loans at an interest rate of 20 per cent per month which makes it impossible to imagine the date the loan will have been repaid.

The Women's Bank

The Women's Bank emerged out of a pilot project of women's mutual help groups initiated by the National Housing Development Authority (NHDA) of Sri Lanka in 1989. The project was based on the traditional system of savings and credit, known in Sri Lanka as seettu. The participants in such a group contribute an agreed sum of money to a pool on a daily, weekly, two-weekly or monthly basis. The pooled amount is awarded to one member of the group at a time, either in an agreed order or by drawing lots. Seettu enables people who find it difficult to save to gain access to a lump sum of money which they would otherwise not be able to acquire. By using the concept of seettu, the project was able to make the women feel quickly familiar with the concept of the women's mutual help group.

The National Housing Development Authority started to recruit women who had been active in improvement programmes for low-income settlements to work as community assistants or praja sahayaka. The NHDA hoped that such (part-time) staff would help to overcome the serious shortage of extension workers and field staff and to reach a larger number of households within a shorter period of time. The intervention of the praja sahayaka resulted in considerable progress, because the praja sahayaka had a much better relationship with the women in low-income settlements than the staff of the NHDA.

However, the praja sahayaka quickly realized that it would be very difficult for them to operate within the framework of a government agency. In 1990, some praja sahayaka organized themselves in a non- governmental organization called the Praja Sahayaka Service. This organization played a major role in the development of the Women's Bank among the women in low-income settlements.

The strategy used

The Women's Bank is a cooperative bank, with bank branches consisting of saving and loan groups. All members of a group meet weekly. The leaders of all groups in one bank branch meet monthly. The working committee of a bank branch meets weekly. All members of all groups of a bank branch meet at least once a year. All members (or their representatives) of the Women's bank meet once a year.

To be eligible for membership of a group, a woman must have a low income, she must reside in a low-income settlement and she must be willing to participate in group activities according to a set of rules and regulations. Only one member of a household can participate in a particular group and only persons who trust each other can be members. The groups consist of 5-15 members only; no money lender can join the group and the group leader cannot be actively involved in party politics.

The members select a chairperson, a secretary and a treasurer for the group. The treasurer keeps the financial records, while the secretary keeps the minutes of the meetings. During this period, the group establishes a routine of weekly meetings which last 30 to 90 minutes. At these meetings, the women learn to arrange savings and loans, to keep records of all monetary transactions, to select office bearers, to understand the group constitution, to open a bank account and to manage emergency loans.

The group is monitored by more experienced group leaders, and the group leaders participate in the group leaders meetings. Once the group is well established it receives some stationery (a pencil and an eraser, a ruler and a file cover, three ledgers, a red ink pen and two blue or black pens) from the Praja Sahayaka Service. Each member of the group also receives a printed copy of the rules and regulations to memorize and understand.

Five months after the day of formation, the primary bank branch tests the members of the group to ensure that they know and understand the rules and regulations. If the group passes the test, it becomes a formal member of the bank branch. It receives a small steel cash box from the Praja Sahayaka Service. Now, each member must buy a share of Rs.100.00 in the bank, pay an admission fee of Rs.10.00 and a welfare contribution of Rs.10.00 per month and continue the compulsory saving of Rs.5.00 per month. The Praja Sahayaka Service also helps the group to get a seal for the group which is considered an important indication of recognition of the group's official status.

Saving is the first activity a group undertakes once it has been formed. During the first five months, members can get an emergency loan of Rs.100.00 which they have to pay back as soon as possible. The group as a whole decides the service charge for such loans. During the next five months, when the accumulated savings have increased, loans of Rs.250.00 to Rs.500.00 as emergency loans, for small-scale production activities or for consumptive purposes, and the service charge is set at 4 per cent per month. As the group increases its savings, the maximum loan amounts which the women can borrow from the bank also increase.

Women use the loan for a range of purposes:

The impact

The women's Bank has produced positive results which are visible in the low-income settlements. The members of the Bank do no longer need to run after money lenders for a loan and they have settled their old debts. The members will not starve, if they fail to make any earnings during a day. They can withdraw their savings or take an emergency loan from the group to feed the children and meet the daily requirements. At the beginning of the new school year, they can give their children what they need for school and as a result the rate of drop-outs in the settlements is gradually going down. For funerals and other emergencies, members can get donations from the group and soft loans from the Bank. Small-scale producers can now pay for their raw materials with cash and are in a stronger position to bargain.

Expansion of the women's groups
YearNumber of
Number of
Number of
bank branches
1995 (May)(560)(5600)20


Contact address:

K.B.V. Rupa Manel Silva
Women's Bank of Sri Lanka

Tel: +94-11-268-1355
Fax: +94-11-268-1355

Address: 145180 Seewahepura E Zone
Women's Bank Centre
Borella, Colombo 8
Sri Lanka

Hari Srinivas -
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