Bandhan, awaiting RBI final nod to start its banking operations, would focus on serving low-income group...
Bandhan, awaiting RBI final nod to start its banking operations, would focus on serving low-income group and the eastern region as a full-fledged bank, says Bandhan Financial Services chairman and managing director Chandra Shekhar Ghosh. In an interview with Mithun Dasgupta, Ghosh says the proposed Bandhan Bank is expected to breakeven in three years after commencing operation. Excerpts:
When do you expect the Bandhan Bank to start operations?
According to the RBI instruction, the launch should be by September. So, from April to September, we can start operation any time. It will depend on the final licence from the RBI. We recently sought the final clearance from it to set up Bandhan Bank.
You are now putting in place the necessary infrastructure for the launch of the banking operations. How has been the progress so far?
We will be launching 600 bank branches simultaneously. It is not a small job. So the team is working on that front and it would like to complete the job quickly. So far, there has been a good progress. Selection of branch premises is complete. Now the interior decorations for the branches are on.
Recently, IFC and Singapore’s GIC committed to infuse equity capital of R1,600 crore in Bandhan. Will it be enough to commence banking services or will you be looking to raise more funds later?
With this capital infusion our total capital base may grow to about Rs 3,200 crore in March. Rs 3,200-crore base is huge compared with the RBI’s stipulation of Rs 500-crore capital requirement for a new bank. If our capital base is strong, the bank will run in a good way to serve pan-India.
As a full-fledged bank what will be your focus areas?
As a bank, we would like to serve all citizens — both men and women. Low-income group segment and the eastern region will be our focus area.
When do you expect Bandhan Bank to break even?
We are a running organisation. And we have already been a sustainable- and surplus-driven organisation. So, when we will be transformed into a bank, another 2-3 years will be needed to achieve break even. As we have a good and financially viable model, we hope breakeven will be faster compared with any other new bank.
You talked about the new bank’s aim to operate across the country. How many of the 600 branches will be in the rural areas and in the metros?
About 50% of the total branches will be in rural areas. We may launch about 50 branches in metro cities. As our penetration is higher in West Bengal, highest number of branches will be set up in Kolkata, followed by Mumbai, Delhi, Hyderabad, Bengalore and Kochi. In the rural areas the bank will provide doorstep services with the handhold devices for money deposit and withdrawal, while in urban areas and metro cities, we will have ATMs.
On the product front, primarily which products are you planning to launch with banking operations? Will there be any special product for women?
The products will be vanilla products from the banks per se. On liability side, there will be savings and fixed deposits. On asset side, we already have loan products, so we would continue with them. We may offer small loans for commercial vehicle and affordable housing. As a microfinance institution, all our customers are women, so our existing loan products will be fit for them. We may not launch product only for women.
How many people have you hired so far to launch the banking operation?
We have already hired 400 experienced people from the different private and public sector banks. Most of these recruits are, however, from the private sector banks. As many as 20-25 people have been recruited for top management posts. We have hired 3,000 freshers as well. Now, we don’t need any further recruitment.