Bandhan Financial Services, a microfinance institution which is mapping out its entry into the banking domain, will focus on “un-banked” territories even after it becomes a bank.

Chandra Shekhar Ghosh, Chairman and Managing Director of Bandhan, said the institution’s already existing operational geography in rural areas could provide opportunity for deposit mobilisation too. He said small and tiny businesses, which Bandhan has served so far, are in the process of graduating to bigger firms, fit for a banker’s portfolio.

“We have captive deposit areas too. For scaling up, of course, we would tap the rich, the urban middle-class and youth who are just on the threshold of becoming bankable,” he said at an interaction organised by the MCC Chamber of Commerce and Industry here.

However, for lending, Ghosh said Bandhan’s banking incarnation will not shy away from the poor. He said much of Bandhan’s established credit delivery model, spread of network in rural hinterland, particularly in the east and the north-east, relationship-based financing, and recovery system would be extended to the proposed bank.

The differentiators

Cash-flow based lending and biometrics-enabled KYC (know your customer) could be a differentiator of Bandhan’s banking model for advances, he indicated. “We intend to continue to bring banking services to the doorsteps of savers as well as depositors,” Ghosh observed. “We would keep the cost to the minimum. We would prefer “human teller machines” rather than ATMs. Monish Shah, Senior Director of Deloitte Touche Tohmatsu, said the bank would be positioned in niche areas. Deloitte is helping Bandhan transform into a bank.

He said a new market opportunity was emerging for the smaller players in the banking space. Small-size banks will gravitate to niche markets left out by the big players. The largely unserved MSME (micro, small and medium enterprises) sector will also be among Bandhan’s priorities.

IPO plan

Bandhan, after turning into a bank, has plans to float an IPO (initial public offering) within three years.

Now it has an 18-month timeframe to set in place the required infrastructure.

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