SashaktIndia – Powering the MSME engine

According to the Global Findex Report by the World Bank, India has the second highest unbanked population in the world, after China. Against this backdrop, Bandhan Bank, which is going to complete five years of operations as a universal bank on August 23, is playing a crucial role in facilitating timely access to institutional credit to the economical weaker sections of society. Bandhan Bank’s performance over these five years, and its key achievements bear testimony to the fact that banking services – both credit as well as savings instruments in the form of deposits – can make a deep positive impact on the lives of people.

Completing five years – Serving the last mile

Bandhan Bank, with inclusive banking at its core, has assiduously worked towards the upliftment of the vulnerable sections of society, under the leadership of Mr. Chandra Shekhar Ghosh, its Managing Director and Chief Executive Officer, who is a pioneer in the field of microcredit and inclusive banking.

Not only has the Bank provided those often ignored by the formal financial system access to timely credit, it has also fostered a culture of savings through deposits, which has led to financial independence for many low-income households.

Sterling Performance - Key Highlights

• · A strong granular deposit franchise and growing advances: Customer base: 20.31 million Indians; Deposit base: ₹57,082 crore (4-year CAGR = 47.41%); Asset base: ₹71,846 crore (4-year CAGR = 46.51%).
• · Strong retail focus: CASA ratio of over 37%; Share of retail to total deposits at 77.7%
• · Unrelenting focus on prudent banking: CAR of 26.45% (Much above the regulatory requirement of 10.875%)
• · Cost to income ratio at a very healthy 27.9%
• · Continued to grow and maintain asset quality despite challenges over the years including demonetization, cyclones and floods: GNPA at 1.43% and Net NPA at 0.48%.
• · Around 71% of banking outlets in rural and semi-urban areas.
• · A job creator: From around 13,000 employees when it first granted the banking licence, Bandhan Bank now has around 40,000 employees on its payrolls.

Role Post Covid and focus on MSMEs

Going forward, Bandhan Bank will have an even more important role to play as people, especially those at the bottom-of-the-pyramid, and micro, small and medium enterprises (MSMEs) seek to rebuild their lives and businesses post the disruptions caused by Covid-19 pandemic.

In sync with the government’s focus on fostering an Atmanirbhar Bharat, Bandhan Bank is playing the role of a key catalyst by promoting self-reliance. Through a diverse range of products, including Micro Banking Loans, SME loans, Agricultural Loans and Retail Loans, the Bank’s products have helped the underprivileged, especially women, live a life of dignity by allowing them to pursue economically productive activities like starting their own small business – be it in the field of agriculture, or food processing, small retail or local transportation. This has led to a direct and indirect impact on job creation as well. Bandhan Bank has over one crore micro-borrowers and with Bandhan Bank’s help they have been able to not only ensure their own livelihood but also created jobs for others. Assuming that if these borrowers employed even just one person under them, that would translate into at least one crore additional jobs. 

Expansion mode

The Bank has now set its sights on expansion, to help bring the ‘Bandhan Bank’ experience to more Indians and help them benefit from its socially conscious business model. The acquisition of GRUH Finance in 2019, helped the Bank diversify its lending portfolio and allowed it to finance the affordable housing dream of several of its existing as well as new borrowers.

Financing MSMEs is a key area of growth for the Bank, considering the potential and lack of penetration of credit in this segment. MSMEs are some of the largest job and wealth creators of the economy, but often find it difficult to access credit. Bandhan Bank seeks to change that with its focus on this segment, which is timely as it coincides with the government’s intention of fostering the development of this sector, as exhibited through a slew of stimulus measures announced recently.

Bandhan Bank’s transformation from an NGO focussed on the welfare of poverty-stricken women in 2001, to an NBFC-MFI in 2009, and finally a full-scale commercial bank in 2015, is without a parallel in this country. 

A high-powered panel discussion organised by Network 18, to be aired on August 23 at 5:30pm, will throw more light on how the Bandhan Bank model of banking has made a difference to India. The discussion that will be simultaneously aired on CNN News 18, CNBC-TV 18 and CNBC Awaaz, will feature Mr. Pronab Sen, former Chief Statistician of India, and currently Programme Director for the IGC India Programme and Mr. Chandra Shekhar Ghosh, Managing Director and Chief Executive Officer, Bandhan Bank. The session will be moderated by CNBC-TV18’s Executive Editor Latha Venkatesh.

Disclaimer: The views, suggestions and opinions expressed here are the sole responsibility of the experts. No Forbes India journalist was involved in the writing and production of this article.