WOMEN'S Bank Shuns Old Banking Culture

Inter Press Service 22-SEP-98

TOKYO, (Sep. 22) IPS - Harumi Yagi was seeking a loan to augment the capital she and several other women gathered to put up a shop, but they found themselves shut out of Japan's traditional banks.

So they turned to the Women's Citizen's Bank (WCB), a credit union that since its creation in August has responded to women whose plans for business and greater self-reliance have been set back by recession and traditional banking approaches here.

"It was impossible for us to borrow from the big banks because as housewives we did not have a regular salary, nor did we have assets as the family homes are usually in our husbands' names," Yagi explained.

Yagi and her friends will put up "We-Shop," which sells clothes and other sundries. As a non-profit organization, it follows a system where 10 percent of profits will be sent to Asian countries to support projects that help women become more financially independent.

"The organization is geared to help women who cannot borrow from regular banks because of their low economic status, to get on their feet by lending them money," explained Eiko Mukaida, 52, one of the bank's two owners.

Mukaida, a former assembly member who resigned after eight years in local administration, says she hopes WCB will become a full-fledged lending bank soon after she overcomes massive bureaucratic red tape.

"There are many women customers out there who need the money and I am sure of success," she insisted. Japan has a few other financial institutions that help women entrepreneurs, but WCB is the first that is solely for women.

But putting up the Women's Citizen's Bank has not been easy, especially in a male-dominated society that treats women not as equal partners but rather supporters of the mainstream system.

Yasuko Ito of Nest, a day care center, knows exactly what that means. Before she got approval from WCB, she had sought a loan of some $26,000 from a big bank that asked her to come back -- with her husband.

"Banks think it's risky to lend to women who have no record of being successful in business," explained Kiyoshi Ota, a director in the social policy research division of the Economic Planning Agency.

But the women's bank venture is not just about an organization run by women, for women.

In many ways, it also thumbs its nose at Japan's prevailing banking and corporate culture, one that is built on close-knit cooperation between big companies, bureaucrats and politicians.

This is part of the greed and corruption that many Japanese see as the core reasons behind why banks have lost credibility and are in deep trouble that threatens the economy today.

Now, the government is scrambling to stave off a collapse of the banking system, through a plan to use public funds of some $97 billion to ensure that none of 19 major banks fold up under the weight of bad and uncollected debt.

Mukaida says WCB, based in Kanagawa prefecture outside Tokyo, offers an alternative to this tired, old system. After all, she recalls, she was sick of hearing stories of how during the bubble economy, public bank money was spent to entertain finance ministry officials in seedy bars in exchange for special treatment.

Uncontrolled investment in real estate by many banks jacked up property prices so much that ordinary people were left out.

In an effort to avoid this way of doing business, WCB will lend only to women who run businesses that work toward cleaning the environment or offering social help to the public.

Operating as a credit union, WCB hopes to follow a lending pattern similar to that of the Bangladesh-based Grameen Bank.

Already, WCB has received a flood of investors as well as credit applicants. Since its inception, it has had 400 women investors and collected nearly $350,000.

Out of several applicants, it has selected three women-run entrepreneurial projects, including Ito's day care center and Yagi's shop, as the first borrowers.

At 1.8 percent, its interest rates are the lowest among Japanese financial institutions. A strict screening process limits the number of prospective borrowers, who need to have at least 10 co-signers for each loan.

All loans must be paid in five years, and a loan limit is set at $740,000. "We want to avoid bad loans," explained Mukaida.

Some analysts worry that the low interest rates will not allow the WCB to cover bad loan losses and sustain the institution in the long run. But Mukaida, who will not receive a salary for the first few years, says she will try to manage by channeling surplus funds into covering possible bad loans.

In the process, Mukaida said: "The WCB will definitely work to help Japanese women become independent and will also play a crucial role in making Japanese society more equal."

Beyond that, she adds the WCB would also be a small step in reforming a banking system that has been led by men who put profit before developing the quality of life of the public.

"Economic development for men means a lot of expensive high-rise buildings, roads, a never-ending supply of fashionable good that are really no use to the average person," Mukaida explained. "We need money to be spent on better health care for the elderly, education, nursing homes and day care."

Hari Srinivas -
Return to the Improving Women's Access to Credit Page
Return to the Virtual Library on Microcredit