Bandhan Bank keen to comply with RBI norms, says CEO
Will try to comply with the Reserve Bank of India norms on shareholding within the stipulated time, says Chandra Shekhar Ghosh, managing director and chief executive officer, Bandhan Bank. Edited excerpts:
Obviously the market is upset that the acquisition of Gruh Finance was done at a high price. How will you make it reasonable? What is the plan to ensure that even if you bought it expensive you will extract value?
I am not an expert in the market. I am a practitioner in the business. So, today is the market, and the business is tomorrow. We always see what is the future.
If you see when Bandhan Bank, as a micro finance institution converted to a bank, that time also we had several questions raised by the people on how the bank can sustain, can get deposits. But we are going to the public and the public recognised our activities, and how we are serving on that. So, that is one side.
From the beginning we had strategically decided on how we will grow as a bank, whether we grow in a micro finance, or we grow in another segment, where we will give shelter to the bottom of the pyramid. That means, in affordable housing, and in MSME, which is a little bit higher than the micro credit portfolio. So, this is a big opportunity for our country. If I say that there is a government which has declared houses for all by 2022, there is a need of 20 million houses to be built. As of now, it has built only 836,000. So, the balance 19.1 million houses have to be built by 2022. So, there is a need of ₹2 trillion in funding. Who will give this funding?
I take your point, that your eyes are on a sector that is going to immeasurably grow for the long time. My question is a little more medium-term. I think what you have 200 branches of Gruh Finance?
They all become immediately full fledge bank branches. I just wanted to know how are you going to stitch Gruh. Does Mr Sudhin Choksey remain? Can you manage pay-scales? How will you make Gruh weld into the Bandhan culture in terms of profitability? Now we have 3,000-plus doorstep service centre. We have 978 bank branches, our 65% outlay East and NorthEast and Gruh have 194 branches, it is Gujarat, Maharashtra and Andhra Pradesh. So, when we enter this segment, with
of Gruh my business for providing credit support business for the Gruh customer, that is a one area. The Gruh model under Sudhin Choksey as usual, we will transfer to eastern region, including North -East and provided that credit, which we know our customers, we know the credit flow, credit history is there. So there is a big opportunity of business. We are looking to go in that way, to grow on that. It is the most expensive housing finance company. Did you look at other options as well, or was Gruh the only option that you looked at?
Who decides the price? Market decided the price of Gruh, market decides the price of any institution, so I don’t have any chance on how much I can go on discount on that. We are talking to this company from two years before and, at that time, we were not a listed company. So, it feels that maybe our price is very low so price is high there, so we are not matching. But when I list, we also transparently say that what is our price and their price and accordingly we matched on that.
I just wanted to know what the future capital allocation policy would be? Now, the promoter holding post the merger stands at 61%, and it needs to be brought down to 40% as per the RBI norms. So are we looking at any more mergers in the near future in order to do that?
Merger is very complex. We have done one merger, and for that we were talking for two years before to materialized. Again, it will be like 9-12 months required to convert on that, as per the industry practice. So it is not that easy to immediately go for another merger. But we are very keen on how quickly we will like to compete with the RBI compliance. So we are thinking of many ways on that. We are not in the position to share the details at this point. But we are very comfortable on that. Will you apply to the RBI for some relaxation because you have shown an intent to dilute your promoter holding?
We are now going to the RBI to ask their permission for merger.
That of course. But, what we are asking you is, since you have shown intent, a rival bank has actually taken the RBI to court, but you have shown the intention, it may move the RBI to give you more time rather than make any hasty decisions?
I don’t think that is the way to go.
Chandra Shekhar Ghosh, MD and CEO, Bandhan Bank.