A Case Study of First Women Bank Limited

(FWBL).
ABSTRACT

This paper addresses the main issue of Advances and Innovative Schemes for Women in Pakistan; the
First Women Bank Limited has been focused. This paper makes use of the primary data, existing
literature on the subject, and the secondary data available. The results of the current study indicated
insufficient number of financing facilities were offered to women in Pakistan; which is almost half of the
size of total population. The advances and innovative schemes of credit for women are facing shortage
qualified staff, small branch network, small number of schemes, ineffective advertisement policy,
traditional methods of banking, and lack of innovative banking. The banks Advances and Innovative
schemes for women in Pakistan will not become successful if these issues are not addressed properly.

INTRODUCTION

Bank

Any organization engaged in any or all of the various functions of banking, i.e. receiving, collecting,
transferring, paying, lending, investing, dealing, exchanging and servicing (safe deposit, custodianship,
agency, trusteeship) money and claims to money both domestically and internationally. Under this broad
concept, the title bank is found in the American financial system applied to such institutions as Banks for
cooperatives, central bank for cooperatives, export-import bank, federal intermediate credit banks, federal
land banks, industrial banks, investment bankers, and mortgage bankers.

In its more specific sense, however, the term bank refers to institutions providing deposit facilities for the
general public. Such institutions may be classified into two broad groups: (i) commercial banks and their
central banks; and (ii) noncommercial bank institutions. Including in the latter group are such institutions
as the savings and loan associations, mutual savings banks, and credit unions. These institutions are
often referred to as the thrift institutions, although commercial banks also provide savings and time
deposit accounts.

In their specialized heyday, commercial banks were unique in not only being banks of deposit but
specifically providing the most important means of payment, checkbook money or demand deposits
subject to check, the M1 component of the money supply in addition to currency in public circulation.
Demand Deposits could be expanded or contracted by commercial banks by their lending and investing.
Other financial institutions could also lend and invest in their specialized fields, but such lending and
investing was supplied from their available funds, thereby not increasing or decreasing the money supply
in the M1 sense but rather affecting the velocity of existing demand deposits.

Many present-day banks, organized as national banks or state banks and trust companies and located in
the larger cities, are already financial "department stores", engaged in many kinds of banking and related
services. Complete banking services would comprehend a variety of functions, including any of the
following:

* Receive demand deposits and pay customers' checks drawn against them, and operate Automated
Teller Machines (ATMs);

* Receive time and saving deposits, issue negotiable orders of withdrawal (NOWs), and pay interest
thereon, as well as provide automatic transfer services for funds from saving accounts to cover checks;

* Discount notes, acceptances, and bills of exchange;

* Supply credit to business firms with or without security, issue letters of credit and accept bills drawn
thereunder;

* Transfer money at home and abroad;

* Make collections and facilities exchanges;

* Issue drafts, cashier's checks, and money orders, and certify checks;

* Furnish safe deposit vault services;

* Provide custodianship for securities and other valuables;

* Provide personal loans and credit card services to individuals, and lend on or discount customer
installment receivables of vendors;

* Act in a fiduciary capacity for individuals, as well as establish common trust funds;

* Provide corporate trust services;

* Act as factors and engaged in equipment leasing;

* Invest in government and other debt securities. (Woelfel; 1994: 69-70).

Banking in Pakistan

The Reserve Bank of India continued to function in Pakistan until 30th September 1948. The State Bank
of Pakistan was inaugurated on July 1, 1948. The first important task which the State Bank of Pakistan
had to attend to was the issue of currency notes and withdrawal of Reserve Bank of India notes with over-
printing thereon of Government of Pakistan, which had been in circulation in Pakistan so far. The Banking
Companies Act was promulgated in 1949, empowering the State Bank to control the operations of
Banking Companies in Pakistan.

Further, the State Bank restricted the opening of new branches by foreign banks in port towns or in big
cities from where trade was being carried out in foreign countries, while Pakistani banks were allowed to
open as many branches as possible within the country. (Siddigi; 1988: 1-4, 16-18).

Some of Pakistan's famous banks are the National Bank of Pakistan, United Bank Limited, Muslim
Commercial Bank Limited, Habib Bank Limited and First Women Bank Limited, (Khawaja; 1983-391).

An Overview of First Women Bank Limited

The FWBL of Pakistan was incorporated under the companies ordinance 1989. The bank is engaged in
commercial banking and related services and provides all types of banking services to the government
and private sector. The bank operates 38 branches in Pakistan.

Since inception the First Women Bank Limited has been working for economic uplift of the country by
stimulating women to play their rightful role. A large number of women and their families have been
benefited by the bank. Their businesses, small though they may seem, are beginning to grow. It's hoped
more women can be reached in the years to come and their contribution to the well being of Pakistan
becomes larger and more significant. It is a matter of great satisfaction that the FWBL has been rendering
such vital services for the last eight and half years and has developed more than 9000 new women
entrepreneurs who have, in turn, created job opportunities for about 150,000 women.

The income of bank's Hyderabad branch is Rs.1,486 millions, and their total expenditures are Rs.0.756
million. Their balance with State Bank of Pakistan is Rs.2.033 million, branch's Pak account is Rs.17.876
million. The bills which are payable by the bank's Hyderabad branch are Rs.1.134 million The profit
payable on TDR is Rs.2.262 million, and their net profit is Rs.0.201 million.

It has more than 75,000 clients. FWBL has the honour amongst all Pakistani Banks to be awarded the
Best Pakistani Bank by Euromoney for the year 1994. FWBL, will continue its endeavours for economic
economic upliftment of women which in turn would ensure not only their socio economic empowerment
but also would accelerate growth of the country. (Jalbani, Officer, 1998).

Functions of First Women Bank Limited

There are total five functions performed by the FWBL. These are as under discussed:

Receiving Deposits: This is the oldest and most important function of bank, as it is largely by means of
deposits that a bank prepares the basis for several other activities. Deposits may be in the different form
as fixed, savings, and current deposits. A reasonable interest is paid on deposits, which attracts the
people to deposit their surplus money, which they do not keep with themselves.

Advances of Money: This function is the main source of profit of the FWBL. This facility may be given for
short or long period. Advances are given for short term and loans are given for long term. Interest rates
vary according the period of advances or loans.

Safe Custody: Quite a number of branches all over the country offer Safe Custody facility to their
customers. The lockers (Safe Custody) are invariably to be installed in the Strong Room of the branch to
ensure maximum security against theft and riots.

Transfer of Money: The FWBL helps commerce and trade by providing safest and cheapest facilities of
transferring money from one place to another by means of banker's drafts and by purchasing bills. This
function enables merchants and others to receive money from their debtors.

General Utility Services: The FWBL is performing the services of general utility, especially in collecting the
bills of Gas, Water, Telephone and Electricity.

Methods of Study

There are various methods of conducting research studies. For example, according to Zikmund (1991:6),
research study is the systematic and objective process of gathering, recording and analyzing data for aid
in making decisions. Similarly Emory (1994: 17) terms research as an inquiry carried out to provide
information for the solution of the problem, while Polansky (1974: 2) refers research as a systematic
investigation intended to add available knowledge in a form that is communicable and variable.

Steps in the Research Process Designing and conducting a project can be very complicated because of
the number of parties involved. Furthermore, a research project must be well planned to ensure that
money is well spent. Organizing the project decisions into a series of steps simplifies the planning
process. The steps involved in research are; Formulate the Problem, Specify the Research Design,
Develop the Data Collection Procedure, Design the Sampling Procedure, Collect the Data, Process and
Analyze the Data, and Present the Results. Below these steps are discussed in brief.

Formulate the Problem: A thorough understanding of the problem is essential when planning a research
project. Otherwise, the data collected may not adequately address the problem. Unfortunately, problem
definition can be difficult because not enough is known about the situation. If the problem is not properly
defined, the data collected may be useless.

Specify the Research Design: The second step in the research process is to specify the general design of
the project. This step involves two decisions: the type of research to be conducted and the sources of the
data. The research objectives determine which of the three general types of research, namely Exploratory
research, Experimental research, and Descriptive research are to be used. If the objective of the research
is to understand a problem or situation, Exploratory Research is required. If the objective is to identify
cause and effect relationships, Experimental Research is conducted. If the research objective is to
provide detailed data on who, what, when, where, how, why, and/or how often, Descriptive research is
used. Descriptive research typically takes the form of a survey such as the opinion polls that have
become commonplace in our society. After establishing the basic type of research to be conducted, the
source, or sources, of the data to be collected must be determined. Marketing research da ta can be
obtained from secondary, syndicated, and primary data sources. Secondary data are those that have
already been gathered for some other purpose but these also provide useful information for the current
problem. Syndicated data are data gathered by syndicated services and provided to all subscribers of the
service. The third data source, primary data, refers to data that are gathered specifically for the project at
hand.

Develop the Data Collection Procedure: When collecting primary data, whether for an exploratory,
experimental, or descriptive study, the procedure to be used to collect the data must be developed.
Typical decisions at this stage involve the selection of the method used to collect the data and the design
of any necessary data-collection instruments.

A variety of methods exist to collect data. Either people can be questioned or their behaviour can be
observed. Questioning can occur in person or by phone or be self-administered. The appropriatness of
each method varies across studies, and the researcher must determine which method is best for study at
hand.

The design of a data collection instrument can influence the accuracy of information collected in a study.
Simple changes in wording or in the way the questionnaire looks can drastically influence the responses
received. The researcher must ensure that questions are properly worded and that the instrument is
properly designed.

Design the Sampling Procedure: For most studies, only a sample of all possible people or objects will be
questioned or examined. Designing the sampling procedure to use is critical. Who is included as a
potential sample number, how sample numbers are selected, and the size of the sample all affect what
can be inferred from the results.

Collect the Data: Companies often hire field services to collect marketing research data. The data
collected are only as good as the procedures used to collect them. Therefore, the researcher must
institute procedures for selecting and supervising field services to ensure the desired data collection
procedures are followed.

Process and Analyze the Data: After the raw data have been collected, they must be prepared for
analysis. It is important that the researcher selects appropriate data analysis procedures, given the
information needs of the study and the type of data collected.

Present the Results: Marketing research findings are of little value unless their meaning can be clearly
communicated. Established formats exist for written and oral research presentations. The researcher
must see to it that these formats are followed. (Crask, Fox, and Stout; 1995:15-17).

Advances and Innovative Schemes for Women in Pakistan

The First Women Bank has a relatively small advances portfolio amounting to Rs.416.169 million as per
audited accounts of December 31st, 1996. Un-audited Management Report shows the advances at
Rs.437.798 million on April 30th, 1997.

The advances portfolio of First Women Bank is healthy due to the following three factors.

Paid-up Capital of Rs.200 million resulting in lower Single Client Limit";

Moral force exercised over women entrepreneurs which helps in recoveries.

Prudence in diversifying risk in various sectors of the economy.

First, the paid-up capital is relatively small which makes its Single Client Limit" relatively small under
Prudential Regulations. This has resulted in keeping away large industrial projects which have an
unsatisfactory repayment track record in Pakistan. The management of First Women Bank Limited has
used this limitation to their advantage and concentrated on increasing the number of small borrowers.
Two clear advantages have emerged out of the situation. The risk has been diversified over large number
of smaller accounts and that small borrowers in our economy have a better repayment track record.

The second factor behind the success in creating a healthy portfolio is that First Women Bank has
catered to women entrepreneurs' credit needs. This has created a strong moral force amongst women
which has helped the Bank in many collection cases.

The third success factor has been getting away from traditional sectors which have reached saturation
point in today's economy, and depending on the genius of women entrepreneurs to operate small sized
firms. According to un-audited Management Reports of March 1997 only 19.092% exposure was on the
textile sector, while 72.591% of the total loans exposure was taken on services and miscellaneous sector.
Transport sector had a 2.313% share. Chemicals and Pharmaceuticals sector had a 1.950% share while
the traditional Leather sector had merely 1.056% share of the total advances. The size of advances also
shows the diversity of the borrower's pool. The following figures have been taken out of unaudited
Management Report of April, 1997.

Another aspect of risk diversification is geographical distribution of advances. The following has been
derived out of an unaudited Management Report as of March, 1997.

Special Innovative Saving Schemes for Women

According to the brochure of FWBL, the following are the some of the innovative saving schemes for the
women.

Deposit Multiplier Certificates: Since under profit and loss sharing system profit has to be paid to the debit
of PLS profit paid A/C, therefore, instead of placing the amount in suspense account the amount of profit
payable on Deposit Multiplier Certificate is added to said deposit account of the parties relating to each
certificate issued to them.

Family Group Saving Account: Family Group Saving Account is a novel way to bring family together while
earning profits individually. Minimum five members of a family, immediate and distant, also business
partners, having their accounts at any branch of the First Women Bank, can now form a Family Group.

Features of the Account: Receive 0.5 per cent more profit than any other saving account. Each account
holder in the group must maintain minimum balance of not less than Rs.1000/- throughout the year. All
adult members of the group will be eligible for loans for feasible income generating projects or bank's
terms and conditions.

Foreign Currency Account: No questions are asked about the source of foreign exchange. Deposits can
be made through cash remittances travellers cheques, or sale of FEBCs Choice of payment is in Pak
rupees or any other foreign currency. No income tax, Wealth tax, or Zakat tax deduction. Facility of
obtaining loans in Pak rupees. Withdrawal of foreign currency up to any amount in any part of the world.

Home Management Deposit Account: This is a time saving scheme which enables you to pay your utility
bills and other dues and taxes through FWBL. First Women Bank gives an attractive facility to open a
Home Management Account with us and gives us the responsibility to payment of our utility bills and
taxes to the respective departments/agencies. The payment of utility bills includes gas, electricity,
telephone, insurance premium, HBFC installments, property tax, water tax, TV and VCR licenses etc. You
have a facility to pay your children's fee in time through this account.
Foreign Education Loan Scheme: Helps deserving students acquire a Foreign Degree. Loan will be
returnable in three years. Amount issued is according to the actual requirements. Collateral is acceptable
to the Bank. Mark-up depends on the nature of the case.

Prime Ministers Self-Employment Scheme: Unemployed women can now start their own sizeable
business. Unemployed females can borrow up to Rs.300,000 for feasible income generating projects. A
group of maximum five persons can also obtain up to Rs.one million (max Rs.200,000 per person) for the
same purpose. Business concerns with majority female control in management and ownership can also
avail self-employment loan. The borrowers must raise 10% of their own capital for loans up to Rs.100,000
and 20% for above Rs.100,000. Mark-up is 13% if the loan is paid one month before he due date, 13.5%
on the due date and 15% after the due date.

Instant Profit Saving Certificate: Most suitable for retired people, persons with limited income, housewives
and others. Rate of return on IPS certificates will not be less than 12.5% p.a. IPS certificates are issued
for a period of 3 years. Profit payable every month. IPS certificates can be purchased worth minimum of
Rs.5,000. Amount to be received in multiples of Rs.1000.

Deposit Multiplier Certificate: A great scheme for a secure investment for Women and Students in five
years the invested-amount is doubled. You can invest from Rs.500 to Rs.100,000. (In multiples of Rs.100
only). Profit is given on the completion of five years. If encashed before the maturity period, rate of profit
will be the same as that of normal saving account, calculated half yearly. Note: Zakat and withholding tax
will be deducted as permissible by the rules.

Students Saving-cum Financing Scheme: Under the scheme even students can have their own business
features of the scheme: rate of profit 1/25 higher than the profit rate declared for general saving accounts.
You can open an account with an initial deposit of Rs.100 only. Female students are eligible for loans up
to Rs.25,000 for starting business without collateral and up to Rs.200,000 with suitable collateral. Mark-up
rate as low as 10% per annum on loans up to 25,000. Financing facilities are offered for the male
students involved in income generating business, in equal partnership with the female members and
ensuring employment to move women in their business.

Small Loan Scheme: To help women earn respectable living. A revolutionary financing scheme to enable
women with scant or no resources to obtain loans without collateral for setting up small business.
Maximum loan limit under the scheme is Rs. 25000 with repayment period of three years. Concessions
available under the scheme include: Rate of mark-up 10%. Loan can be obtained even if the borrower
has no equity. Personal guarantees are accepted if the borrowers are unable to provide any tangible
securities. Training at no cost for identification and establishment of business (subject to the availability of
seat).

Women Own Saving Scheme: A unique "firinge benefit" offer features of the scheme: Rate of profit 0.25%
more than on normal saving accounts. Account can be opened with only Rs.1,000. Facility of DISCOUNT
CARD entitling the account holders to avail 10-30% discount from authorized stores through out the
country.

Tree Plantation Credit Scheme: An environment-friendly scheme for poor women to generate income
through fruit-bearing-tree Plantation.

Features of the Scheme: Rs.4000 per acre are disbursed in three years for tree plantation and
maintenance. Loans up to Rs.25,000 on two personal or group guarantees. Loans repayable in five
years. Annual mark-up as low as 10%.

CONCLUSIONS

During study some observations were made, which are presented below:
1. It appears that the bank has shortage of staff.

2. The need is to appoint more professional staff.

3. The branch network of the bank in the country appears to be limited.

4. Loan range seems to be limited.

5. Bank's advertisement policy appeared to be less attractive as compared to other banks.

6. There appears a shortage of facilities for lady customers.

7. It seems that the bank has traditional methods of banking.

8. There seems ineffective target market research.

SUGGESTIONS:

On the basis of the conclusions drawn, the recommendations are presented below:

1. The bank need to increase its staff.

2. The bank need to appoint more professional staff.

3. The branch network of the bank in the country need to be increased.

4. More range of loans need to be introduced.

5. The bank need to strengthen its advertisement policy.

6. The facilities for the lady customers need to be increased.

7. More modern techniques of banking need to be implemented by the bank.

8. The target market research to be made effective.

REFERENCES:

(1.) Charles J. Woelfel, Encyclopedia of Banking and Finance, Tenth Edition, Probus Publishing
Company, Chicago, Illinois, The United States of America, 1994, P.69-70.

(2.) Siddiqui, Asrar H., Practice and Law of Banking in Pakistan (Fourth Edition), 1988: 1-4, 16-18.

(3.) Khawaja 1983:391.

(4.) Jalbani, Mariam, Officer, First Women Bank Limited, 1999.

(5.) William G. Zikmund, Business Research Methods (Third Edition), 1991, P-6.C. William Emory,
Business Research Methods (Revised Edition), 1994, P-17.

(7.) Norman a. Polansky, Social Work Research, The University Chicago Press, Chicago, 1974, P-2.

(8.) Melvin Crask, Richard J. Fox, Roy G. Stout; Marketing Research: Principles and Applications
(copyright 1995), Prentice Hall, PP.-15-17.