Institute of micro-finance and cooperative development.

A Journey from an NGO to a Bank: Bandhan Bank's Experience

On the morning of March 9, 2017 the Centre for Self-help Development organized an interaction program on an experience sharing session with Mr. Chandra Shekhar Ghosh, Founder and Managing Director of Bandhan Bank, India. The program took place in the capital city, Kathmandu and was attended by 40 heads of various Commercial Banks, Development Banks, Wholesale lending organizations, Microfinance Institutions (MFIs) and media persons.

The interaction was held by the Centre to introduce the works of Bandhan Bank and share its experience on how microfinance operations could be upgraded to a universal bank and serve both the poor and non-poor clients from rural, semi urban and urban areas for creating enterprises and self-employment opportunities and taking modern banking facilities to the doorstep of the people.

Mr. Chandra Shekhar Ghosh was the Chief Guest and Keynote Speaker of the program which was chaired by Mr. Shankar Man Shrestha, Chairman of CSD. Special Guest of the occasion was Mr. Anil K. Shah, Chairman of Nepal Bankers’ Association (NBA) and CEO of Mega Bank Nepal Ltd. Also seated on the dais were former Chairman of Nepal Bankers’ Association, Mr. Sashin Joshi, CEO of Nabil Bank Ltd. and Mr. Ashoke SJB Rana, CEO of Himalayan Bank Ltd.

Welcoming the gathering of various stakeholders, Mr. Shanker Nath Kapali, Executive Director of CSD introduced the guests to the activities and achievements of the Bandhan Bank.

Delivering his keynote speech, Mr. Ghosh shared how the concept of Bandhan came into being when he visited the fish market in Kolkata and realized that moneylenders were providing a soft loan every morning to the fish mongers and collecting a small fee against it every day. When he pointed out the high interest rate that they were paying to the moneylender, the fish mongers replied, “We receive the money we require without any hassle with no requirement of guarantors nor signatures at our doorstep. It is convenient for us. Why would we look for loans from any other place?” This incident gave idea and encouragement to establish Bandhan in the year 2001.

Driven by the constant desire to serve the people better, Bandhan marched on to become a universal bank in 2015. As said during his speech, “Small is beautiful, but big is necessary. Especially when in a country like India, where half the population of 1.3 billion people are unbanked. Despite the criticism that microfinance was facing in the year 2009-2010 and the crisis in Andhra Pradesh, we were largely unaffected by it.”

Bandhan Bank Ltd. was incorporated on 23rdDecember 2014 with 51% ownership of its subsidiary, Bandhan Financial Holdings Limited. It received the in-principle approval from the Reserve Bank of India (RBI) for setting up a universal bank in April 2014 with the banking regulator giving its final nod in June 2015. Incidentally, Kolkata-headquartered Bandhan is the first bank to be set up in the eastern part of India after independence.

Bandhan Bank started with 501 branches, 50 ATMs and 2,022 Door step Service Centers (DSCs) on day one. Presently, the bank has 3,544 touch points pan India consisting of 826 bank branches, 2,437 DSCs and 281 ATMs, serving more than 10 million customers. The bank has mobilized deposits more than Rs. 20,800 crores and has an outstanding loan book of Rs. 21,290 crore. With a team of nearly 23,750 employees on roll, the bank has two divisions - general banking and micro banking, offering a suite of retail financial solutions, including a variety of savings and loan products. Currently, the savings bank account interest rate is 6% for balance above Rs.1 lakh and 4.25% for balance up to Rs.1 lakh. For term deposits, the maximum interest rate offered is 7.70 % for one year with an additional 0.5% for senior citizens.

Quoting three criteria for success, Mr. Ghosh said, “Foremost, is your staff. Just like how Lord Ram would not be successful without Hanumanji, without our staff we cannot achieve success. Our team was hard working and dedicated, and we equally invested in them through training programs throughout the year. Secondly, is our customers. Our customers are our ambassadors and we must do our very best in providing them with the best service and facilities. Lastly, are our non-customers and media, who make their statement independently and largely hold the public view and opinion.” Summing up his speech, he said, “People in microfinance require PHD – Patience, Hard work and Dedication. Then only we can serve the target group and achieve great heights.”

On the occasion, Special Guest, Mr. Anil K. Shah commented, “The model that Mr. Ghosh has presented is people centric, and is the key reason behind their success. Our people in South Asia pay little attention to training and staff retention. We must change this mindset and better serve the people at the bottom of the economic pyramid. Nepali bankers have much to learn from the Bandhan experience.”

Speaking from the Chair, Mr. Shankar Man Shrestha addressed the gathering saying, “Bandhan has not compromised on the fundamentals and principles of Microfinance. We on the other hand have become profit oriented, governed by a handful of profit driven investors. The problem is on our part, not our staff nor our clients. We must change ourselves and our mindsets.”

He further added, “The evidence of Bandhan’s success is the strong monitoring and supervision system and the focus on training learning centers of the organization. Despite becoming a universal bank, Bandhan continues to have 100% active clients, while we cope with 40% dormant clients. It is high time we embrace the PHD that Mr. Ghosh has spoken of and learn from his experience.”

Bandhan Bank is a bank for all whose focus remains unchanged to meet the financial needs of the people who are overlooked by the formal banking system and create better education, health care and self-employment opportunities. In sync with the philosophy of, ‘Aapka Bhala, Sabki Bhalai’ and keeping financial inclusion at the heart of it, Bandhan is committed to provide a host of products and services, competitively on par with India’s top private and state-owned banks.