Bandhan Bank INTERVIEW | Will focus more on secured loans, as it looks to diversify loan book

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May 13, 2020 10:13 AM

Bandhan Bank expects around four weeks could be needed for normalization of its microfinance collections after the countrywide lockdown is lifted.

Bandhan Bank declared its fourth quarter results on Wednesday.

Bandhan Bank expects around four weeks could be needed for normalization of its microfinance collections after the countrywide lockdown is lifted, says managing director and CEO Chandra Shekhar Ghosh. In an interview with FE’s Mithun Dasgupta, Ghosh informs going forward the bank would like to go for more diversification of its loan book with focusing on more secured loans. Excerpts:

What percentages of your microloan and non-microloan customers have opted for the moratorium of debt repayment in installments?

Ghosh: For microloan, 100% loan moratorium in value was opted for April as we could not meet our microfinance borrowers for collections due to the lockdown. Around 79% of our microfinance borrowers have an average deposit balance of around Rs 3,070, which is equivalent to over four weekly installments. We are continuously connected with our customers over the phone. As per their feedback, after the lockdown is lifted may be another four weeks could be needed for normalization of microfinance collections. Around 87% of our housing loan EMIs had come in April, while 65%  (in value) of SME installments had come during the month. Around 41% (in value) of NBFC-MFI’s installments had been paid. We are giving loan moratorium to the NBFCs based on their requests.

Have you seen some credit offtake recently in microfinance as well as non-microfinance sector?

Ghosh: We have started operations in microfinance business with opening offices in the green zones across the country. We have disbursed some microfinance loans, though the amount is very small. We will disburse more loans to our microcredit customers if they need because we know their credit history for a long time. We have not yet started fresh disbursement in non-microcredit sector (after the lockdown is imposed).

By what time do you see fresh loan disbursement in non-micro segment?

Ghosh: It will depend on when the lockdown will be lifted. After restarting the operations, customers will look into their cash flow conditions. Depending on that they will take a call on fresh loans. It will depend on a lot of factors.

What is your bank’s outlook on asset quality in the first half of this fiscal?

Sunil Samdani (Bandhan Bank CFO):  It will depend on the regulatory guidelines and the situation on the ground. The faster the lockdown is lifted, the faster we will get back to the pre-lockdown period in terms of collections from different sectors. Until that happens there will be requirements for supports from the RBI and the government. The loan moratorium has helped.

On the back of the Covid-19 pandemic, what will be Bandhan Bank’s approach to grow business?

Ghosh: Going forward, we would like to go for more diversification of our loan book, more secured loan book than the current book. Now, around 62% of our loan book is microcredit. We would like to be more focus on affordable housing and MSME sectors. Also, we would like to go for more geographic expansion across the country.

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