KOLKATA: On September 28, 2018, Bandhan Financial institution founder Chandra Shekhar Ghosh was in for a impolite shock. The regulator got here down closely on him and the financial institution he had based for his failure to pare down the promoter stake to the prescribed 40%.

The Reserve Financial institution of India stated his pay packet couldn’t enhance, and barred the lender from opening branches with out prior permission. Ghosh, nevertheless, persuaded Mint Highway to grant him 40 department licences final December, serving to calm the nerves of Bandhan stakeholders.

ET Awards 2019
Extra importantly, in lower than 4 months, Bandhan Financial institution introduced its acquisition of Gruh Finance – a blockbuster buy serving to pare down promoter holding to 62% and diversify into mortgage property.

Ghosh has now established his credentials as a banker who not solely understands microfinance just like the again of his hand however one who also can minimize offers with the nation’s sharpest monetary brains — and within the shortest doable time. Gruh was owned by the venerable HDFC Group. The merger has come into pressure on October 17.

“I’m very completely satisfied that the merger is full within the shortest doable time. There have been apprehensions about the potential for expertise from Gruh Finance leaving earlier than the merger. Let me let you know, all of the staff members of Gruh, together with their senior individuals, have joined Bandhan,” Ghosh tells ET with seen satisfaction.

It provides Bandhan entry to a readymade housing-loan portfolio of Rs. 18,200 crore, along with its personal present mortgage portfolio of Rs. 46,000 crore — a formidable asset measurement for a four-year-old financial institution. Its deposits have grown to Rs. 49,200 crore, together with Gruh’s Rs. 1,600 crore.

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About 78% of this cash has come from retail deposits, reflecting the belief Bandhan has developed amongst savers throughout areas.

Ghosh says its deposit mobilisation grew 75% year-on-year from the western states and 45% from central India. Bandhan Financial institution is the winner of the ET Rising Firm of the Yr Award in 2019. “That is an honour and a recognition for our arduous work over the past 4 years. The award may even encourage the whole staff to work tougher for the subsequent 4 years,” says Ghosh, who had bagged the ET Entrepreneur of the Yr Award in 2014, the 12 months earlier than he launched Bandhan Financial institution.

It acquired the inprinciple banking licence the 12 months earlier than together with IDFC Financial institution.

The lender now has 4 verticals — micro credit score, department banking, MSME and housing finance.

“Three of them are for credit score companies. We contemplate them as enterprise progress merchandise. We additionally provide private loans, two-wheeler loans, however these are merely to satisfy buyer wants, not for driving enterprise progress,” Ghosh says. Certainly, he doesn’t imagine in biting off greater than he can chew.

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A statistician by coaching, Ghosh believes that there’s limitless progress alternative in microfinance. “India has 25 crore households. If we exclude the highest 15% and backside 15% of them and once more depart one other 20%, we’ve 12.5 crore households which can be eligible for micro credit score. At current, we’ve 5.5 crore micro mortgage debtors.

Contemplating that there could also be about 20% overlapping of debtors, we’ve a internet four.5 crore households who borrow micro loans. This implies, we’ve eight crore households who would not have entry to micro credit score even as we speak,” he says.

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This implies, if common credit score measurement is Rs. 50,000, there’s an untapped market of Rs. four lakh crore. With Rs. 2 lakh crore in excellent loans, the scale of the microfinance market as we speak could be round Rs. 6 lakh crore. Ghosh expects the market to develop to Rs. 15 lakh crore within the subsequent 5 years even on a conservative GDP progress estimate of 6% per 12 months.

But, the housing mortgage enterprise would offer Bandhan a a lot wanted steadiness. The financial institution has determined to maintain Gruh’s 195 places of work purely for house mortgage enterprise with out remodeling them additionally into legal responsibility facilities. It has additionally opened 106 separate shops inside its branches for advertising house loans.

However on the regulation entrance, Ghosh’s job is way from over. He must carry down the promoter stake to 40%. This may be completed by way of one other acquisition or direct dilution of promoter holdings.