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Simplicity at its best – Bandhan Bank, India

When the fundamentals of microfinance are followed, great outcomes are achieved. This is true with Bandhan Bank which has been given universal banking license by the Central Bank of India in 2015. In just 15 years of establishment as an NGO, Bandhan which has been operating microfinance for the poor first transformed into a Non-Banking Financial Company and then into a full-fledged technologically adept bank serving its over 12 million customers.

For the purpose of exposing CEOs and Board Officials to the microfinance activities of Bandhan Bank, India, the Centre for Self-help Development (CSD) organized a Study Visit to Bandhan Bank from May 20 – 27, 2018. The 10 member team traveled to Assam and Meghalaya to observe the microfinance activities and operations firsthand. The team was led by the Director of CSD, Mr. Satish Shrestha and coordinated by Senior Officer Ms. Stephaniema Rana.

The team visited the field activities in Shillong, Meghalaya and Guwahati, Assam during which they were surprised to witness the discipline and commitment of both the members and staff during the group meetings. Bandhan has givencontinuity to its weekly group meetings and has maintained close contact with its members. The group members of Sharada Bandhan in Guwahati shared that Bandhan has contributed to their socio-economic up-liftment, increased income levels and improved quality of lives.

“The members of Bandhan are well disciplined despite being such a large group. Additionally, 90-100% members are loanees as compared to Nepal’s just 60% loanees per center. In Nepal we carry out credit appraisal just because it is a requirement. But in India, they undertake careful credit appraisal as they realize its role in reducing the chances of default,” said Mr. Nara Hari Neupane of Sahara Nepal.

As observed by Ms. Chandrakala Neupane of Mahila Upakar Manch, the members were making loan demands only as per theirrequirement. One microfinance member from Motinagar, Shillong said, “If we take many loans, we have to make equally more repayments. The weekly repayment system is to our benefit as we can pay smaller loan instalments each week. We are satisfied with the loan provided by Bandhan and do not have the need for additional loans.”

In Bandhan, loan amounts of upto INR. 1.5 lakhs is handled by the micro-banking branch while those of above INR 2 lakhs is handled by the banking branch. All financial transactions are clearly recorded at the group meetings, both by the field officer as well as by the members. A copy of the receipt from the POS (Point of Sale) machine is provided to he group as well for safekeeping.

Appreciating the systematic use of technology in Bandhan, Mr. Hari Niraula of Sahara Nepal SACCOS said, “In Nepal we went too far ahead with technology use without considering certain factors. Here, the POS machine used by the field officers is simple, efficient and effective.” Noting the efficiency of the field staff Mr. Bir Bahadur Adhikari of Shreejana Development Centre commented, “The work is completed within the day. I am impressed with the neat, simple and up-to date operation system.” During the interaction at the Doorstep Service Centre (DSC), Nepal’s equivalent of Branch Office, the staff shared howthey tackled loan defaulters. Contradictory to Nepalese MFIs, in Bandhan, no group pressure is exerted on the defaulter. The DSC Head has to make a compulsory household visit on the day of default itself. Personal householdvisit is made to ascertain the member’s situation and members are encouraged to pay only the amount that they can afford. Moreover, they are encouraged to continue attending group meetings so that the relation with Bandhan remains intact. In the case of default due to business failure, time is given for recovery before disbursing a fresh loan.

“I greatly appreciate Bandhan’s simple living, high thinking philosophy. There is cooperation and coordination at all levels and the staff are diligent workers,” said Mr. Ganesh Bdr. Chand of Udayadev MP Coop. Ltd. Each DSC has a poster exhibiting Bandhan’s values of CREATE - Cost effective and simple, Respect for all, Exemplarygovernance, Accountability, professionalism and discipline, Transparency and integrity, and Effective team work and  commitment which is followed by all levels of staff. The team also discussed with Mr. Kangkan Mazumdar, the Regional Head who voiced the values of Bandhan. He said, “The members are the owners of Bandhan and we are their employees.” As the Regional Head he oversees six states, 7  clusters, 348 DSCs, around 2663 staff and 12 lakh clients with a loan portfolio of INR. 5,000 crores.

Impressed with the close monitoring and supervision by the Area, Cluster and Regional levels Mr. Ek Raj Giri and Mr.Hem Raj Giri of Sahara Nepal said, “We will also try to inculcate the same system in our organization. We appreciate the helpline numbers at the DSC for the members to contact the office in case of any emergency.”

Mr. Batuk Shrestha of Shrijana Community Development Center said, “I have noticed that Bandhan has covered almost all the target groups in their area. The staff are dedicated and committed and there was no evidence of hierarchy among them. There is no micro-loan above INR. 1.50 lakhs, whereas in Nepal the Central Bank itself allows collateral free loans up to NRs. 3 lakhs.”

The visit to the Training Learning Centre (TLC) in Rangia, Guwahati was an eye opener for the participants. There the team realized the need for regular training and human resource  investment. Bandhan has eight TLCs pan India and provides a minimum of one training per year per staff up to DSC level. Training programs are conducted throughout the year, with the resource persons comprising of faculty members and staff from Bandhan School of Development Management (BSDM), the Head Office and Regional Office.

The Doorstep Banking Officers (DBOs) are recruited under de-centralized free competition. A C.V. box is maintained at all DSCs where aspiring candidates can drop-in their C.V. which is    later forwarded to the Head Office. A field verification is conducted by the Area Head to verify the candidate’s background and character. Once the candidate passes his/her interview they are sent to the TLC for an eight-day orientation course, which includes field visits as well. A non-refundable training fee is also charged from the candidates. The candidates are exposed to their expected duties and responsibilities and only after the completion of the course is their recruitment finalized. As a result of such exposure, the drop-out rate of staff is minimum. “Motivation is the key factor and in Bandhan there is motivation and team work from the top to bottom level. A large population, easy mobility and the conducive policy of the Government is also favorable towards Bandhan,” said Mr.Jiban Acharya of Dhaulagiri Community Resource Service Center. Summing up the visit, Mr. Satish Shrestha said, “The Nepalese MFIs have drifted from the original mission of microfinance. In Bandhan they follow the same values from top to bottom level keeping the fundamentals intact. They have used technology to their best interest and the staff are mature and satisfied. The job description of staff is simple and clear and field officers are recruited between 20 – 30 years of age, when they are already mature.” “The study visit was very well planned where one observation was tied up with another visit. We have learnt from  Bandhan’s experience and hope to inculcate a few changes in our organization,” said Mr. Gyanu Nath Mainali of Sahara Nepal.

As the CEOs and BoDs of prominent MFIs of Nepal participated in the study visit, it is hoped that the visit will result in effective implementation of programs and action plans which will follow the principles of microfinance.

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