By Tamal Bandyopadhyay| Jul 7, 2016
In 'Bandhan: The Making of a Bank', author Tamal Bandyopadhyay traces the story of Bandhan Bank and its founder Chandra Shekhar Ghosh. An excerpt:
A peek into the internal meetings that used to be held every week in the run up to the launch of the bank will give a fair idea of the obstacles faced and how Bandhan found ways to overcome them. While the account of such meetings is as true as it could be, I am refraining from naming the senior professionals except for [Chandra Shekhar] Ghosh, who was leading from the front.
A review meeting held on 20 December 2014, on the ninth floor, in the conference room, was a packed house with employees sitting in three rows behind the first row, which was occupied by the senior management team.
Ghosh: How many days are left for the launch?
Almost everybody, in chorus: 116. (At that time, the target date for the launch was 15 April 2015).
Ghosh: How many days minus Sundays?
Again, in chorus: 100 days.
Ghosh quickly got down to work, asking how many lease deals for bank branches had been signed.
The executive in charge of premises: 168.
Ghosh: What was the target?
The executive in charge of premises: 350.
Ghosh: Why couldn’t we achieve the target? I want all 600 deals to be signed by 15 January. Now, let us know the status of the premium locations.
The executive in charge of premises: In Kolkata, we have done ten agreements, and another ten are expected to be closed next week. The (cost of) rental is the issue; because we are in a hurry, the landlords want to take advantage... In Mumbai, the rental is very high. They are asking for Rs 6 lakh per month and Rs 36 lakh as advance. The branches will not make money in the first two years.
Ghosh: We need to look for selling third-party products to generate income. Get the right place for the branches, and the right people to run them. No compromise, please.
Another gentleman, at this point, said, ‘Sir, we should look for those locations where the Bengali population is very high in Mumbai and Delhi.’
Ghosh curtly replied, ‘We are a pan-India bank; not for any community. By the way, how has the handheld device pilot project at Ultadanga been working?’
A gentleman associated with the project said, ‘Sir, it’s extremely slow. Our boys can’t download even though the devices are connected to the server.’
Ghosh, looking terribly agitated, said, ‘Don’t confuse me. Our system is not working... No supervision, no monitoring... Success depends on the process... My fourteen years of management experience in Bandhan has taught me that complaints must be accepted and solved; don’t give excuses. The department heads must accept responsibility…
‘You asked me for people, I have given you. It’s your responsibility now. You accept the fault and rectify…
‘The bank is my life. I can’t compromise with life… I can compromise with my people. I will fire them; sign the termination letter.
‘Talk to FIS and sort this out quickly. We must start the next pilot projects at Canning [South 24 Parganas] and Hasnabad [North 24 Parganas]. Let FIS manage them.’
Then he started explaining the model of the bank.
‘A few DSCs will be attached to each branch. Every DSC will have five credit officers, looking after 25 groups of 3,000 customers. The distance between a DSC and a bank branch will be 2 km. The DSCs will start work at 7.30 am, and the first group meeting will be held at 8 am. The credit officers will be back to the DSCs by 2 pm.
‘Bank branches and the DSCs will be two channels of the bank.
‘Fifteen bank branches will form a cluster. There will be three operational heads to help the cluster head manage. They will look after five branches each, riding a motorcycle.
‘In the microloan channel, six DSCs will have one regional manager, and six regional managers will have one divisional manager. The DSCs will report to the branches but will have dotted-line relationships with the regional managers and divisional managers, who will monitor them.
__PAGEBREAK__‘DSCs will have the power to sanction loans up to Rs 1 lakh. The branches and DSCs will complement each other. Any questions?’
Nobody had any questions.
Ghosh ended the meeting, asking the microloan business head that 67 lakh KYC forms must be distributed among the borrowers by December end.
‘Let’s put in more efforts. We cannot build a bank working from nine to six. You all are leaders, not managers.
‘We need to move fast with as many branches as possible as more small banks will start soon…’
(The RBI gave in-principle licences to ten small finance banks on 16 September 2015, three weeks after the launch of Bandhan Bank. Eight of them are microfinance companies. They will have to be operational within eighteen months from receiving the conditional licence.)
No to Fair Weather Friends
Another meeting was held on 1 August 2015.
The weather was bad; there was a depression over the Bay of Bengal, and major waterlogging at Salt Lake City Sector V; attendance in the office was low. The depression over the north-east of the Bay of Bengal intensified into cyclonic storm ‘Komen’, with the meteorological department forecasting heavy to very heavy rains in Gangetic West Bengal. Chief Minister Mamata Banerjee had cut short her visit to the UK by a day and was coming back to Kolkata that evening. The state government had sounded a high alert in all south Bengal districts. As many as 48 people had died thus far in West Bengal, and the state had called in the army for rescue operations.
Ghosh started by saying, ‘In bad weather we have reached office. I don’t see too many of you… No excuse till 23 August. No leave till 23 August. I will assess people who are with me in times of stress, not good times. Please tell your family, this is an emergency.’
The legal department suggested a six-page document for loan sanctions. Ghosh rejected it outright, saying, ‘I want a one-page document. More paper will push up the cost; the borrowers will get confused and bad loans will rise.’
Ghosh asked his secretary, Piyali, to bring the file of dummy forms. Since Piyali could not locate the file, Ghosh asked her to get all the files that were on his table.
Then he asked the premises department head whether the soft board had reached every branch. While the concerned executive was groping for an answer, Ghosh called up the branch located on the first floor of the Bandhan headquarters on DN 64, Sector V, Salt Lake City. The response was: ‘It’s not there.’
Then the discussion was on the timing of the bank branches. One senior executive suggested that Bandhan branches should remain open for an hour extra compared to other banks. Ghosh loved that suggestion.
Promptly, he said, ‘The branch timing will be 9.30 am to 4.30 pm. Anyway, second and fourth Saturdays are a holiday, but don’t give leave, use these two days for training.’
Then he turned to one of the zonal heads who was lagging behind other zones, in terms of preparedness of branches. ‘The bank is totally target-based; if you lose business, the bank will lose business. Why should I keep you?’ he asked.
Done with him, he asked how many branches were ready and the status of mock runs in branches.
The executive in charge of branches reeled out the data: West Bengal 274, Bihar 77, Assam 63, Maharashtra 40, Uttar Pradesh 31, Madhya Pradesh 23, Tripura 22, Rajasthan and Chhattisgarh 17 each, Odisha and Gujarat 16 each, Jharkhand 15, Uttarakhand 10, Delhi and Telangana two each, Andhra Pradesh, Kerala, Mizoram, Meghalaya, Nagaland and Sikkim one each.
At that point, Ghosh chose to underline the challenges that the bank could face on the first day.
One challenge was filling in cash in ATMs on a Sunday (23 August was a Sunday). Even if the bank wanted to fill in cash with new deposits collected on the first day, it would not happen in the first half. Besides, who would count the cash and sort it out?
One suggestion was to get the money from DSCs and fill the ATMs, but that would not work as DSCs had been asked not to keep any cash on 23 August. It was decided that either the ATMs would be closed on the first day or very few of them would operate in metros.
__PAGEBREAK__Distribution of welcome kits among the depositors was another issue ahead of the launch. India Post would pick up the packets from Kolkata, and Blue Dart Express Ltd worked only at 229 pin codes. So, First Flight Courier Ltd also got a share of this job.
A bigger challenge was cash management. Every day, beginning 24 August, the DSCs would generate cash, about Rs 6 lakh per centre. If one centre got looted, it would destroy the bank’s reputation.
Such amounts were not new to the DSCs, but they were not in the limelight before. With Bandhan becoming a bank, everybody got to know how these centres worked and they could be targeted. Ghosh did not want to take any chances. His advice was: Involve all police stations and write to the district magistrate and superintendent of police in every district. And, of course, involve other banks for cash management.
Finally, he asked everybody to wear formal clothes on 23 August to signal the change—Bandhan was no more an MFI, it was a bank—and requested his colleagues to have haircuts. To this, one of the women executives retorted, ‘We can go to the parlour only if we have time, sir.’
Ghosh chose to ignore her comment and told the premises department head to change the banner at every branch from ‘opening shortly’ to ‘opening on 23 August’.
By the time the meeting got over, it was 4 pm. Before leaving the room, Ghosh asked: ‘Are we ready?’
All executives present there said: ‘Yes, sir.’
Ghosh: ‘How many days to go?’
All: ‘Twelve and a half days.’
Ghosh: ‘How many hours to go?’
Nobody was expecting this, but Ghosh had the answer. It was like a military parade.
The exercise went on till 20 August when Deloitte presented its last ‘Go Live: Readiness Review Report’.
Even in the last twelve and a half days, something happened which could have derailed the bank’s launch.
President Pranab Mukherjee was to launch the bank. His wife, Suvra, died on 17 August and, naturally, he could not make it.
In fact, his office had informed Bandhan a few days earlier that she was critically ill. By that time, invitation cards had been printed and the minute-by-minute schedule of the programme was sealed, a requirement for any event graced by the President.
There were three options before the bank: One, to postpone the launch; two, to postpone the event but make the bank operational on 23 August; and three, to look for another chief guest who would launch the bank.
Ghosh called an emergency meeting of a few senior executives in his room on the day the President’s wife died.
Piyush Pandey, national creative director, India, and vice chairman of Asia Pacific at Ogilvy & Mather (O&M), which was looking after the branding of the bank, joined the meeting over the telephone, from Mumbai. His suggestion was that the bank should go ahead with the launch function.
It could be done in a unique way, by two of its customers: One representing microbanking, and another, general banking.
One borrows money from the bank, and another keeps deposits.
After hearing all of them, Ghosh wanted to be left alone in the antechamber attached to this room, his mobile phone switched off. Finance Minister Arun Jaitley had already been invited for the function but his office had not confirmed his presence till then. Time was fast running out.
At that point, Bandhan Bank’s chairman, [Ashok] Lahiri, stepped in. Ghosh took a flight to Delhi and accompanied Lahiri to his meeting with Jaitley. New invitation cards were printed two days before the launch but there was no time to send them to the guests who were flying down to Kolkata from other cities. They got their cards either at the airport or at the hotels where they were staying.
With the final data migration taking 36 hours, the bank’s website went live at around 11.30 am on 23 August 2015, minutes before Jaitley lit the lamp to mark the inauguration of Bandhan Bank.
It went live, with CBS, full networking of 501 bank branches, 2,022 DSCs, 30 ATMs, remittance facility through RTGS/NEFT, and image-based cheque-clearing facility available at the branches on the first day.
One could not have asked for more.