Bandhan Bank Ltd. is an Indian banking and financial
services company headquartered in Kolkata, West Bengal. Bandhan, which started as a micro-finance company in 2001, received banking licence by Reserve Bank of India in 2014. Kolkata-headquartered Bandhan is the first bank to be set up in eastern part of India after Independence.
Vision
- To be a world class bank for convenient and
affordable financial solutions to all, in an inclusive and sustainable manner.
Mission
- To provide our customers accessible, simple,
cost-effective and innovative financial solutions in a courteous and responsible manner. To create value for all stakeholders through a committed team, robust policies and superior systems and technology.
History of Bandhan Bank
Bandhan Bank Limited was incorporated on 23rd December 2014 as a wholly-owned subsidiary of Bandhan Financial Holdings Limited. Bandhan received the in-principle approval of the Reserve Bank of India (RBI) for setting up a universal bank in April 2014; the banking regulator gave its final nod in June 2015. Bandhan Financial Holdings is owned by Bandhan Financial Services Limited (BFSL), the largest micro finance organization in India.
Table 1- Financial Structure Of
Bandhan Bank as an NGO from 2003-TO-2006
Analysis:From the above figures it can be found that Bandhan had a
stable financial structure, it can be noticed that the capital asset ratio and gross loan portfolio to total assets have constantly increasing
showing
disbursements.
better
capital
planning
and
loan
Present Challenges being Faced by
Bandhan Bank Bandhan field staff members were trained in microcredit activities but lacked the experience of savings mobilization. challenge was in converting them to barefoot bankers. Also, the integration of the existing field staff with highly skilled bank branch employees was likely to be a tough task. Bandhan operated in remote locations, with 80 per cent of its operations in rural areas and 45 per cent in unbanked areas. 36 Rural India still happened to be largely under-connected and suffered huge power shortages. Giving Bandhans business an online capability could be a challenge.
Future Challenges : The transition from an NBFC to a bank, however, is not
going to be as easy. There are many interviews where Mr. Gosh points out to the probable challenges that the bank may face. In one of his interviews he said that We only need to meet the SLR and CRR requirements." Well that is a big requirement, as banks have mandatory obligations to maintain there is statutory liquidity ratio (SLR) and cash reserve ratio (CRR) at 21.50% and 4% respectively.
Continued :Another challenge that can be faced is having an appropriate
product basket for all. As it expands its business as a bank, products too need to go through a change to cater to both rural and urban clients. Similar change would also be required in the model of transactions. As an MFI, collateral free loans were disbursed which now would be a difficult proposition to continue with. A better risk management approach would have to be adopted to sustain and grow.
Continued
:-
Geographical center for operations can also be considered as a
challenge. As trust is a major factor for banking, there can be chances that the client base in rest part of India other than east may be willing to experiment with a new bank. Keeping the profitability for initial some years can be a concern as most capital would be utilized to set up new operations, like increasing the number of branches, buying new technology, acquiring human capital, setting up of ATMs etc.
Continued:Acquiring human resources from upper to lower level
management will again be
a challenge. A bank needs
management driven with vision and clarity, setting up a board
that can take the right directions and decisions can be considered as one of the important factors. The existing staff is also a concern as most of them are either graduates or undergraduates and Bandhan would need to acquire people with better qualification and skills to improve on their banking dream.
Continue d:-
Lack of technology can also be a hindrance as their clientele
would belong mostly to rural parts where internet connectivity is minimal. This would restrict bank from using latest methodologies of online banking.
The bank may also face stark competition from other
commercial banks, these may not be active in rural markets, but would have a strong urban client base.
References:
Baru M, Bandhan Bank will serve rural East in india: CMD Ghosh.
Bureaucracy Today (BT) , 2014, 36-37.
. Bhoumik I, Bandhan picks Deloitte to help in banking entry. Live Mint , 01. 2014. Ghosh. D, Chandra Shekhar Ghosh's Bandhan banks on building ties with the underprivileged. Forbes India Magazine , 2014, 01-04. Nayer L, As a Bank we can give more than just Credit. OUTLOOK , 2014, 01-05.