Having recently bagged a licence from the RBI to commence banking operations, Bandhan Financial Services’ is no minor feat.
With a loan book of about Rs 6,000 crore, Bandhan today has a network of 2,016 branches — about 45% of these are in unbanked rural areas of the country.
The country’s largest microfinance institution, however, traces its humble roots to Bagnan in Howrah district where Chandra Shekhar Ghosh started its operations 12 years ago.
Some 55 km from Kolkata, Bagnan is quietly celebrating Bandhan’s success. “Our customers, who are mostly women, are very happy and excited that we bagged a banking licence. They are saying that after we launch the operations, they can come to our branches and avail full-fledged banking services. It means a lot to them,” says Tapas Paul, branch manager at Bandhan’s Nuntia branch in Bagnan.
Paul, 29, has been with the MFI major for the last six years. He is feeling more secure now as he would be absorbed in the banking operations. “Earlier, friends and relatives were not very convinced of the nature of my job as most of our customers are women,” says Paul.
On a hot and humid afternoon, the other six people in the office, all credit officers, are busy with their group registers. Each credit officer looks after 3-4 groups and every group consists of about 30 women to whom the microfinance company lends.
“We have got a highly motivated workforce. Every credit officer knows this area like the back of his hand. We have day-to-day interaction with each of our customers,” says Paul. According to him, this connect would help the upcoming bank to provide better services to customers.
“Women with low literacy levels in this semi-urban area hesitate to walk into a bank branch even if they are financially self-sufficient. We will be a different bank altogether,” he says.
Bhaskar Sen, chairman of ICC National Expert Committee on Banking, Finance & Insurance, feels Bandhan, with its huge branch network in unbanked rural areas and more than 54 lakh customers , will surely help in financial inclusion of women.
Sen is a former chairman and managing director of United Bank of India.
“Apart from lending to women customers, it can now help them in small savings where mainstream banks could not reach so far. Moreover, it makes sense for women in the unbanked regions to have a bank account of their own as women are more astute savers than men,” he says.
Earlier, talking to FE, Bandhan CMD Ghosh had said that, as a full-fledged bank, it would focus on tapping the large unbanked population as well as deal with existing customers in unbanked rural areas.
Alok Prasad, CEO of MFI Industry body MFIN, says loans to low-income households have been Bandhan’s core competence and there still exist many such households that are unserved or underserved by mainstream banks. Prasad says apart from focussing on its existing customers, Bandhan could also tap the upper-end of the lower-income group, going forward.
According to him, as a full-fledged bank, Bandhan will, however, face a lot of challenges. Former SBI chairman Pratip Chaudhuri agrees. He says Bandhan, as a bank, has to ‘scale up’ its value of finance. “It has to go for high-value credit. As a mainstream bank, low-value credit will not help Bandhan break even, going forward,” says Chaudhuri. As an MFI, Bandhan’s current loan size is Rs 10,000.
– Mithun Dasgupta