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Bandhan, India's Newest Full-service Bank, Starts Operation

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With Bandhan from West Bengal becoming India's newest full-service bank to begin operations, Finance Minister Arun Jaitley on Sunday (23 August) said a 'blue-painted' city has given birth to a new institution which was not the case when it was 'painted red' -- referring to the past Left rule.
 
"When the city was painted red, new institutions were not born, but the existing ones shifted. Now painted blue a new institution is born today, indicating the birth of a Bangla entrepreneur," Jaitley said as he inaugurated operations of Bandhan Bank.
 
Bandhan Bank today launched its operations with 501 branches, 2022 service centres and 50 ATMs across 24 Indian states. It plans to have 632 branches and 250 ATMs in 27 states by the end of fiscal year 2016. It starts with 1.43 crore accounts and around Rs 10,500 crore loan book. It has 19,500 employees. 
 
The company, which started operations as a micro finance institution, got final approval from RBI in June to launch commercial banking operations.
 
Over 71 per cent of the branches will be in rural India and at least 35 per cent in unbanked rural pockets.
 
State-wise, West Bengal has the maximum number of branches 220, followed by Bihar 67, Assam 60, Maharashtra 21, Uttar Pradesh and Tripura 20 each, and Jharkhand 15.
 
The Kolkata-headquartered bank has two divisions -- micro banking and general banking – and will offer complete retail financial solutions, including a variety of savings and loan products.
 
The savings bank account interest rate has been fixed at 4.25 per cent for balance up to Rs.1 lakh and 5 per cent for balance above Rs.1 lakh. For term deposits, the maximum interest rate has been fixed at 8.5 per cent for one to three years, with an additional 0.5 per cent for senior citizens.
 
The Reserve Bank of India’s licensing norms stipulate that a new bank must have at least Rs 500 crore capital. Against this, Bandhan starts with Rs 2570 crore capital which will soon be ramped up close to Rs 3052 crore. This translates into 44.54 per cent capital to risk weighted assets ratio or CRAR for the new bank, signifying its robustness. 
 
Referring to the shift in regime in West Bengal from a long-running Left rule to Mamata Banerjee-led Trinamool Congress government, Jaitley said there has been a change of colour of the city from red to blue.
 
"In my younger years, I saw the city painted red. Now the whole city has been painted blue", he said.
 
Jaitley added that some of the policies of the past should be done away with and realisation of the potential was important.
 
Stating that the state would get all financial benefits as announced earlier as well as the proceeds of coal auctions, he promised that political differences would not come in the way of development of West Bengal.
 
"Political differences will continue. But that will not matter for the development of West Bengal."
 
Reiterating Prime Minister Narendra Modi's statement that growth of India would not happen unless the eastern part of the country also grew, Jaitley said, "Growth of eastern states is important for the growth of India. There has to be more economic activity in eastern UP, Bihar, Odisha and West Bengal."
 
"Cooperation between the Centre and state will work towards that", he said.
 
Chandra Shekhar Ghosh, Founder, Managing Director and Chief Executive Officer, Bandhan Bank said, “Our business philosophy is `customer first’. We are a universal bank and we will have equal respect all our customers – big and small. Today, all of us in the Bandhan family are rededicating ourselves to fulfil the demand of every Indian – banking as a fundamental right.  We are committed to usher in a new era in Indian banking.”
 
Amit Mitra, Finance Minister of West Bengal said, “Bandhan started with the twin objective of women empowerment and poverty eradication. With a repayment record of 99 per cent, the organization has been successful in its objectives. Now, the challenge for Bandhan Bank is to push Bengal’s credit deposit rate from around 68 per cent to the national average of over 76 per cent.”
 
HR Khan, Deputy Governor, Reserve Bank of India said, “Bandhan Bank has been born at a challenging time of the Indian economy. With 11 payment banks and two universal banks being added to this sector, banking space in India is getting crowded. The need of the hour is to focus on cost minimization and customer convenience, digital literacy, partnership to cooperate and compete with other banks, and provide protection to customers by having a holistic approach towards banking.”
 
From Micro-finance Entity To Universal Bank 
Bandhan Bank is the first instance in India of a microfinance entity transforming into a universal bank. It received an in-principle approval from the RBI in April 2014 and the banking regulator’s final nod on June 17, 2015. Its investors include IFC, SIDBI and  Caladium Investment Pte. Ltd, a company managed by GIC Special Investments Pvt Ltd.
 
Bandhan made a humble beginning in 2001 as a not-for-profit microfinance enterprise with the idea of making a significant contribution towards alleviation of poverty by empowering women. It transformed itself into a non-banking finance company in 2006. Bandhan is actively engaged in the development space in the areas of education, health, livelihood promotion, enterprise development, market linkage, employment generation, renewable energy and others. Every year a portion of the surplus generated by the company is utilized in fostering these activities.
 
 


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Bandhan bank finance minister arun jaitley