Chandra Shekhar Ghosh: ‘Our credit growth steady … disbursement during festive season almost 95% of last year’

Chandra Shekhar Ghosh said the Reserve Bank of India (RBI) internal working group’s recent suggestions of allowing higher promoter shareholding would strengthen banks, while any licences to corporate houses should be subject to greater supervisory regulations.

Chandra Shekhar Ghosh. (File photo)

6 min readNew DelhiDec 1, 2020 09:50 AM IST First published on: Dec 1, 2020 at 01:01 AM IST

Bandhan Bank MD and CEO Chandra Shekhar Ghosh said the banking operations have returned to normalcy since the disruption caused by coronavirus pandemic in March, as both collections and credit disbursement have returned to near pre-Covid levels. In an interview with Sunny Verma, he said the Reserve Bank of India (RBI) internal working group’s recent suggestions of allowing higher promoter shareholding would strengthen banks, while any licences to corporate houses should be subject to greater supervisory regulations. Edited excepts:

What is the situation for the financial sector now compared to March-April as there has been a threat of spike in non-performing assets (NPAs)?

Yes, this is a very challenging period on that front, no doubt. Now the moratorium period is over, but that also we saw the customer response to payment of instalments is very good. We are pretty much surprised on that, that day-by-day people understand that, okay, banking is part of life and that can help increase their income. They are coming to repay and, in this challenging period also, people like to continue their relationship with banks because they know that in times of crisis, banks can help. Otherwise, moneylenders charge very high rates from them. So, that realisation has helped at the customer level. Day-by-day repayments are improving. In couple of the corners of the states where local lockdowns are happening, even after that, collections are improving day-by-day. In that sense, compared to March, the situation has now become normal.

Do you see credit growth picking up after some rise during festival period?

Very correct on that, every year credit growth has been (during festival season), starting from (Durga/Diwali) puja. Festival season started in October, and this time, the amount of disbursement has been almost 95 per cent of last year. Not only the amount but also the number of people taking loans is almost similar to that of during the festive period of last year. So, the credit growth has been improving. A good monsoon, MSP for agriculture crops being very good and new plantations are helping the rural economy. Also, till now, less number of people are affected by Covid impact in the rural economy. That can help the Indian economy become better and recover earlier than other countries.

The RBI working group’s recommendation has suggested increasing the promoter holding in banks and conversion of NBFCs into banks. What impact do you see if these were to be implemented?

These are very good suggestions which have come and it can help the banking industry. For converting the NBFC into a banking company, like us also, there is an NOFHC (non-operative financial holding company), which is the promoter. Of course, in that time NOFHC had 100 per cent in this bank, which you see diluting from 100 per cent to 40 per cent is a very tough task.

It is not realistic to reduce it in a short period because that time you are also engaged in transformation of the bank, preparing the IT backbone of the bank, attracting the depositors, meeting compliance requirements of the regulators. So, it is better on that front that the new proposal has come.

They have a given time of 15 years now — that is one very good comfort level given to the new set of bankers that will come. That is good and very real (dilution timeframe) because this will allow banks to focus on business in initial years. It’s a very tough thing for a promoter group to establish banks … Second point is that the strength of banks in our country, if the promoter group does not even have 26 per cent equity, why would anyone want to come and form a bank with a 15-per cent ownership. Because you would like to take the ownership of that enterprise.

Are corporates coming forward for restructuring of loans under the new window, what kind of stress do you see?

If you see restructuring on my portfolio, typically not much (because we do not have heavy corporate exposure). Maybe couple of customers ask for additional one or two months, we can give that, that is not a problem. MSMEs are also there. Three or five people are asking on that. We can consider that. The ECLGS for 26 sectors is helping customers to meet their business needs without going for restructuring.

Do you see risk of another wave of Covid-19 infections affecting business?

No, we do not see in that way. There could be a couple of more months of (pain), but it could be in local areas, city-based, some city may recover and another city may see it rising. It may go on for another couple of months, but not till June, July or August. People are also now very much concerned.

What is your expansion strategy amid the pandemic?

Bandhan Bank has completed its five years. On the basis of the learning of those five years, we are planning for the next five. India is a big country. We need to increase the network more in the North side than in the East. Second, because our concentration is also an issue, mostly in the Eastern region, we would like to maintain focus on that, but also diversify to different states other than in the East. In two years, we have opened more than 95 per cent of our new branches in states other than East. So we are diversifying geographically, by the portfolio. There is a big demand for micro-housing loans and we have made a strategy on that.