We intend to stick to micro financing: CS Ghosh, founder and CEO, Bandhan Bank

By: | Published: January 12, 2019 2:19 AM

Ghosh said this was the first time they had lent in the infrastructure space. He also said the company would not do anything like this again and would stick to micro-financing.

Chandra Shekhar Ghosh

Bandhan Bank founder and CEO Chandra Shekhar Ghosh said a Rs 385-crore loan made to a company in the “infrastructure development and finance sector” had turned bad in the third quarter this financial year. In an interaction with reporters following the bank’s third-quarter results, Ghosh said this was the first time they had lent in the infrastructure space. He also said the company would not do anything like this again and would stick to micro-financing.

The markets did not respond well to the merger with Gruh Finance. Do you think the market has not factored in the long-term benefits of the merger?
When I started this bank, people asked who would deposit money with us. In my experience it will take some time for the merger to reflect. I feel that this merger is going to help Bandhan Bank to improve the business we are in, which is micro finance. This decision was taken not for immediate results but as a long-term strategic merger. Both the entities work in the same sector and have a similar culture, and I am sure it will help the bank grow. Affordable housing has penetrated majorly in Maharashtra, Gujarat and in southern India, whereas in other states, affordable housing has not picked up so the opportunities are huge, which we will tap.

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You mentioned that you would like to start lending to the MSME sector. What is your exposure to the sector and what prompted Bandhan to lend to infrastructure players?
We have three kinds of portfolios is this sector. The exposure to small enterprise loans is Rs 1,420 crore and Rs 1,432 crore exposure to micro-finance institutions. In the loan given to IL&FS we have provided Rs 385 crore and are treating it as an NPA. This was the first time we experimented lending to a AAA-rated company and we will not do anything like this ahead. We intend to stick to micro financing. We do not have any other exposure to any other infrastructure firm.

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Have you truly assessed the portfolio of customers in the affordable housing segment. What kind of steps have been taken before exposing yourself to this segment?
There is a big opportunity in this segment and that is the reason we are in it, and we want to be lending our services to this category of customers in varied geographies. If you take Gruh as an institution it has a record of serving such customers for 40 years and their asset quality over the past 20 years has been very good. So we are took the decision of the merger to entirely tap the growing opportunity. We are also trying to educate small business owners on ways to secure funding for growing their business.

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