Dear readers, here we are poting a post on India's newly minted banking institutions. Know more about it.
The Reserve Bank of India granted
"in-principle" approval for banking licences to infrastructure
financing firm IDFC and Bandhan from among 25 applicants, including corporate
heavyweights ADAG Group, Aditya Birla Group and Bajaj Group.
The RBI said it assessed the
quantitative and qualitative aspects of the applicants, including their
financial statements, 10-year track record of running businesses, proposed
business model for the bank and demonstrated capabilities for running a bank,
plan for expanding inclusion, and culture of compliance and integrity.
Bandhan
was the only microfinance institution that applied for a banking licence.
Organisational
Background
Bandhan (meaning togetherness) was
born in 2001 under the leadership of Mr. Chandra Shekhar Ghosh, a Senior Ashoka
Fellow. The main thrust of Bandhan is to work with women who are socially
disadvantaged and economically exploited. Bandhan works for their social
upliftment and economic emancipation.
To achieve the above objective,
Bandhan is basically engaged in the delivery of microfinance services to the
poor women.
Bandhan has been engaged in the delivery
of microfinance service for the last 12 years. The model followed is individual
lending through group formation.
All microfinance activities are
carried under Bandhan Financial Services Private Limited (BFSPL), incorporated
under the Companies Act, 1956 and also registered as a Non Banking Financial
Company (NBFC) with the Reserve Bank of India (RBI).
The microfinance operations started
from Bagnan, a small village which is 60 kms away from the city of Kolkata. In
12 years, Bandhan has travelled a wide geography of 22 States and Union
Territories with special focus on eastern and underdeveloped states of North
East.
Bandhan’s commitment towards triple
bottom-line values is strongly asserted by its intervention in development
activities. It believes that Microfinance is not the last word for development
of the poor.
Aspiring to holistic development of
the poor, Bandhan offers development activities in crucial fields of education,
health, unemployment, livelihood and the like through its not-for profit
entity. Besides, Bandhan also has a program exclusively for the hard core poor
(generally believed to be bypassed by microfinance)
Here's all you need to know about one
of India's newly minted banking institutions:
• Bandhan Financial Services, the first
microfinance institution in the country to win a bank licence, is also one of
the youngest entities to be allowed to enter the banking space.
• The Economic Times reports that
Bandhan is the biggest microfinance company in India, with a presence in 22
states. It is growing at 25-35 percent.
• Set up in 2001 by Chandra Shekhar
Ghosh, Kolkata-based Bandhan began with a focus on working with "socially
disadvantaged and economically exploited women," according to its website.
• Bandhan wants to reach 1 crore poor
households by 2020, ET reports.
• In 2007, Forbes magazine ranked it
#2 in its first ever list of the global top 50 microfinance institutions.
• According to ET, Ghosh will be the
first private entrepreneur from Kolkata to set up a bank, post Independence
.
• With 2,016 branches across 22 states
and Union territories, Bandhan had over 52.33 lakh borrowers as of February.
• It disbursed Rs 963 crore of loans
in February and has total loans outstanding of Rs 5,704 crore.
• Bandhan's current net worth is Rs
1,100 crore, of which Rs 96 crore is pure equity with a capital adequacy ratio
of 21 percent.
• ET estimates that Bandhan will need
to keep Rs 1,420 crore as statutory liquidity requirement and Rs 246 crore as
cash reserves with the RBI.
• The Business Standard reports that
the International Finance Corporation bought an 11 percent stake in Bandhan in
2011 for about Rs 135 crore, with the micro-lender being valued at
approximately Rs 1,227 crore.
• Sidbi (Small Industries Development
Bank of India) is the only other institutional investor in Bandhan, with a 10
percent stake.
• According to BS, Ghosh owns 1.8 percent
while two trusts, the Financial Inclusion Trust and the North East Financial
Inclusion Trust, hold the balance.
• The institution charges 22 percent
interest for loans up to Rs 15,000. Ghosh had earlier told BS that, if granted
a banking licence, the rates could come down by 6-7 percent.
• Bandhan said the award of the
banking licence was a recognition of the microfinance sector and their hard
work to reach unbanked areas and provide financial services. "We will be
able to offer full-fledged banking services to the poor people," Bandhan
Chairman and Managing Director Ghosh said.
• Bandhan has loan schemes such as
Samriddhi for the MSME sector and Sushiksha for education, among others. It
also runs the Bandhan School of Development Management.
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