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Set up in 2001, Bandhan Financial Services has managed to become the largest microfinance company in India today. Chandra Shekhar Ghosh, chairman & managing director, is ecstatic after receiving a bank licence from the RBI and is aiming to remain true to Bandhan’s roots in serving the unbanked population in the country. In an interview with Vishwanath Nair, he talks about the plan of action and strengths of the company.
What is the first plan of action for Bandhan?
First, we want to go to the RBI and receive our approval letter. We are then planning to have our board meeting soon to discuss strategy and the finer points of starting the bank. I think, in about a year, we should be able to start our banking operations.
Are you looking at raising any capital for the new bank?
The RBI requirement is Rs 500 crore and we have a capital of nearly Rs 1,100 crore. So, we are comfortable for now. Even if there is a need for additional capital, the current investors can chip in some more. Foreign fund-raising is also an option, but we will decide on that after our board meeting.
What do you think is your biggest strength?
Our customer base of over 55 lakh is a big boost. We already have an outstanding loan book of Rs 6,200 crore as of March 31 and an employee base of nearly 13,000. I think these things works well in our favour.
What will be your primary focus going ahead?
We want to continue to serve the customer base in unbanked areas. We are present in 22 states and Union Territories. Among our current base of operations, we know our customers well and we will now look at expanding to other similar geographies within the country.
How does becoming a bank change your cost of funds?
Currently, as an MFI, we are offering an interest rate of 20-22%. As soon as we start our banking operations, we will have the ability to accept deposits from our 55 lakh customer base. Other sources of funding will also open. So, clearly, our cost of funds will go down significantly. We will then pass this benefit on to our customers in terms of lending rates.