Bandhan Bank keen to com­ply with RBI norms, says CEO

Mint ST - - BUSINESS OF LIFE - Latha Venkatesh & So­nia Shenoy

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?

194 branches

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.

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IN­TER­VIEW

MINT

Chan­dra Shekhar Ghosh, MD and CEO, Bandhan Bank.

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