Is the First Women Bank Limited too pink to fail? We hope so

If a ‘bank’ created for ‘women’, fails to either serve women, or function as a viable commercial bank, then why should it exist? That is the dilemma that the First Women Bank Limited (FWBL) faces today. 

Founded in 1989 under the patronage of then Prime Minister Benazir Bhutto, the charter drawn for the bank stated that it will be ‘undertaking the conduct of all forms of business of Banking Company in a manner designed to meet the special needs of women and to encourage and assist them in promotion and running of trade and industry and practice of profession.’ And alongside its unique charter, the bank also has to make money, just like any other commercial bank. 

That is the problem: FWBL has struggled to survive as a viable commercial bank. Talks to privatise the bank have been on the table at least four times: in 1994, in 1996, in 2018 and most recently in 2021. In the latest update, the deadline has now been pushed to December 2022. 

So what gives? The Privatisation Commission (PC) spokesperson told Profit that because the label of ‘women’ was attached to the project, it was deemed too risky to  close down a project that was supposed to symbolise women empowerment. Such a move would have been akin to admitting that any efforts to provide women financial alleviation and independence was set-up to fail. 

Should the country’s only bank dedicated to women be privatised; and will the bank continue to serve women if it is indeed privatised?

Up for privatisation in less than a decade

The premise of the bank was simple: it would cater to women at all levels of economic activity, including micro, small, medium and corporate. It was the first commercial bank to launch microcredit in Pakistan. 

The bank’s unique credit policies mean that it finances businesses where either women have 50% shareholding, a woman is the managing director or women employees make up 50% or more of the total workforce. It is also the only bank in Pakistan which offers women single and joint accounts, without any minimum balance requirements or penalties on low balances.

FWBL had an initial paid up capital of Rs100 million. About 90% of that came from the five state-owned banks at the time: the National Bank of Pakistan, Habib Bank, Muslim Commercial Bank (now MCB Bank), United Bank, and Allied Bank. The remaining 10% came from the federal government. For comparison, today, the Ministry of Finance holds an 82.64% share in the bank. Habib Bank has a 5.78% stake; MCB Bank, 5.78%; Allied Bank, 1.94%; National Bank of Pakistan, 1.93%; and UBL, 1.93%.

But despite the changes implemented, FWBL continued to grow at a sluggish pace. Consider, when Sultana started out, in 1989, FWBL had five branches across Pakistan. By 1993, this had expanded to 23.  But in 2010, the bank had only grown to 38 branches; by the time Sultana left in 2014, the bank had only 41 branches.

One of our sources reminisced how in its foundational years the bank opened its first branches in posh localities and the women hired as staff similarly belonged to elite families who didn’t appear to care much about the larger goal of women’s development.

In 1996, FWBL incurred extreme losses owing to exchange rate exposure on faulty foreign investments. The same year, it was put up for privatisation for the first time but the process was suspended after the Women Action Forum made a case against it, calling for a termination of its privatisation. Later, disagreements continued regarding the bank’s purchase with one of the disqualified contenders making a case against the qualified party.