Band­han Bank Won’t Lend to Cor­po­rates

CEO Chan­dra Shekhar Ghosh says the bank will fo­cus on re­tail loans to the fi­nan­cially ex­cluded

The Economic Times - - Economy: Macro, Micro & More - Dheeraj.Ti­wari@ times­

New Delhi: Band­han Bank, a Kolkata-based full-fledged bank that started as a mi­cro­fi­nance com­pany, plans to stay away from cor­po­rate lend­ing and in­stead fo­cus on the fi­nan­cially ex­cluded seg­ment, its CEO Chan­dra Shekhar Ghosh has said.

“Most banks of­fer loans to only 10% of the pop­u­la­tion and are fight­ing for that seg­ment. We are tar­get­ing those who are left,” Ghosh told ET.

He said In­dian banks have so far con­cen­trated only on the cor­po­rate sec­tor and haven’t built up the skillsets to tar­get the fi­nan­cially ex­cluded. “There is a need to build up skills so that bankers can un­der­stand the credit need of this seg­ment, iden­tify right pro­pos­als, the amount to dis­burse, and even re­pay­ment,” Ghosh said. Band­han Bank, which re­ceived bank­ing li­cence along with IDFC in 2014, en­joys a niche in the in­creas­ingly crowded bank­ing space be­cause of its fo­cus on the poorer seg­ment. As much as 91% of its lend­ing port­fo­lio is in mi­cro credit and 68% of its branches are in ru­ral ar­eas. Ghosh said his bank will con­tinue to fo­cus on re­tail loans mostly in the ru­ral sec­tor as it aims to build upon its strengths from its ear­lier op­er­a­tions in the mi­cro­fi­nance sec­tor.

The bank ex­pects its credit port­fo­lio to touch around ₹ 22,000 crore by March 2017 and aims to have a 50% year on year growth in all seg­ments. The bank which has opened 805 branches in its 18 months of op­er­a­tions is also fo­cused on its door step ser­vice centres, which has been its strength as a mi­cro­fi­nance firm.

“The in­fra­struc­ture in th­ese 2,427 ser­vice centres is very sim­ple and the staff is also sim­ply dressed. The idea is to en­sure that cus­tomers are not in­tim­i­dated and we can un­der­stand and ser­vice their fi­nan­cial needs,” Ghosh said.

He said that most of the staff at over 500 branches of the bank are re­cruited from its mi­cro­fi­nance op­er­a­tions, which en­sures that their tar­geted cus­tomer base gets per­son­alised ser­vices. The bank is also open to work Band­han Bank to build upon its strengths in mi­cro­fi­nance

Aims to mon­e­tise

pri­or­ity sec­tor lend­ing port­fo­lio of ₹ 22,000 cr by March 2017

Not keen on

lend­ing to cor­po­rate sec­tor CEO with new small fi­nance banks and aims to mon­e­tise its pri­or­ity sec­tor lend­ing port­fo­lio to large banks that fail to meet the pri­or­ity sec­tor lend­ing tar­gets. Ghosh said the bank has not been im­pacted due to the de­mon­eti­sa­tion drive and ex­pects some of the low cost de­posits to stick. He said the bank has no im­me­di­ate plans to list on stock ex­changes as it has more than com­fort­able cap­i­tal ad­e­quacy ra­tio at 29%. As per the Re­serve Bank of In­dia reg­u­la­tions, the bank will look to list af­ter three years, he said.

It is also not look­ing to ex­pand its branch net­work for the mo­ment and will con­tinue to fo­cus on the east­ern re­gions in the coun­try, Ghosh said.

Ex­pects credit 91% of its lend­ing in mi­cro credit, 68% branches in ru­ral ar­eas

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