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We Need More Bandhans Across India, Says Chandra Shekhar Ghosh

Chandra Shekhar Ghosh is a pioneer. Having seen poverty in the family, Ghosh worked with an NGO in microfinance, and three and a half years ago, founded Bandhan Bank. The bank’s endevaour at financial inclusion has been exemplary, with Ghosh leading from the front. Ghosh is the Banker of the year, in this year's BW Businessworld's Best Banks Magna Awards. Ghosh spoke to BW Businessworld's Suman K Jha

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What are your expectations from the new government?

Their (the Modi government’s) focus has been clear on how to make the economy grow, how to make employment grow. I hope agricultural development, focus on the rural and infrastructural development, especially on  roads and highway, power and connectivity, Digital India remain the thrust areas.

Coming to Bandhan Bank, it reported a nearly 68% increase in net profits in Q4. So how has been the journey since 2015?

The bank started on 23rd August, 2015.  In the last three and a half odd years, people’s trust, people’s recognition has come to the bank and that has been our success.

Now our bank has 987 branches across 34 states.

This is one of the biggest network and customer based bank in our country.

And till now, it has helped us to reach to the unbanked people more because our 71% of banking outlet, rural and semi-urban i.e. unbanked people are more and they are financially exploited more.

So it will help our country to remove or reduce the financially excluded people. The ultimate goal of the government and all of us is for the country to be more financially included more. So, that is the way we are working and that it is the reaching of that point, of course, as a bank, three and a half years, a good number of customers have come and put their deposit to us and that deposit has come to Rs. 43,000 crores plus and the year on year basis is growing very good. 

Would you also like to talk about the numbers? The latest quarter results and all, would you like to talk more about that?

I have already mentioned our customer base of 1 crore 65 lakh and every month, we are reaching out to 3 lakh new customers. This is our objective. If we reach more people and give service to more people, then it’ll have an impact on the balance sheet. So, in that sense our business growth for the last financial year 38% growth, year on year, and the deposit growth has come around 27% growth, year on year basis. So, we feel very good about the growth that has come and the profit growth like I already mentioned was around 48% growth, year on year basis. So, we feel our bank is performing really good in that sense and we’d like to continue this way to the future.

What are your targets, your immediate term objectives and long term target and objectives?

Strategically, if you’re thinking long term, how can we reach pan India, the whole level of customers, the bottom of the pyramid, the middle and top. In that sense, we are working on that. The bank is at par in giving service with any other private or public banking companies in our country. We are opening our branches so we can build a better network to reach the people and we’d like to continue on that.

Digital is our next focus area. We already have digital banking service in our bank. We have mobile banking, we have internet banking.

You had set a target to keep the Gross NPA ratio below 1%. Tell us a little more.

Eighty six per cent of our total book is in micro-credit loan with small-ticket size of loans worth Rs 40,000 per customer.

Our staff meets them on a weekly basis and collects instalments.

Meeting customers on a weekly basis is a physical touch which has helped us to get that advantage, NPA is coming down because of that. We are trying to continue on that. Some NPA has come due to natural calamities. Otherwise, we plan to maintain that.

What are the lessons to be learned by other banks from the Bandhan Bank innovations?

I am a very young banker, I cannot suggest to other banking industries.

The market in India is big. Banks can choose to go for whichever market --  small-ticket size market, medium-ticket size market, big-ticket size market. Any bank that goes to the big-ticket size market, any default, say, even one default, will have an immediate hit on the balance sheet.

But for a small ticket size, one default or even 10 defaults happen it will not have a huge impact on the balance sheet in a big way.

We are reaching our customers with simplicity -- not in a very complex manner. If we become complex, the chances of NPA increasing are higher.

Bandhan Bank’s merger with Gruh Finance is very promising and ambitious too. What does the future foretell us?

In 2015, when we started the bank, we had decided to work differently.

Our core is microcredit, and we will continue on that because number of population is high and a large section is unbanked.

When people’s income increases, they think of a house so. A large number of people at the bottom of the pyramid need housing loans, but don’t  have any opportunities.

So if we decide to grow into affordable housing, what is the way? I can go both ways -- inorganic and organic.

We have decided to take one of the best affordable housing companies in our country – the Gruh Finance. On the basis of their skilled manpower, their processes, their experience, we can grow in a good way for our country to reach many sections, hitherto unbanked.

You have been described as a leader and a skilled entrepreneur who has ventured, where Indian banking systems never ventured into. Would that be a correct assessment?

I would say Bandhan Bank is a very different bank because we are reaching our people with credit and small-ticket of Rs. 40,000.

I feel this is a need for our country, to reach this people and provide them credit and as per the cost of fund, we can also give them some benefit to them and they will economically grow upward.

You have been often asked about this – tell us a little about your background and where the inspiration came from.

 I was born in Tripura and my father had a small sweetshop. I used to work with him while in school.

I saw especially during natural calamities it was a challenge to get three meals in a day -- that was my best learning. I have learnt many things from my father.

When I studied in university, I gave tuitions to children. From that amount, I gave a piece of cloth to my father to make a shirt. He however said: ‘give it to your uncle’. ‘I am always there with you, give it to your uncle he’ll get happy,’ he said.  And I learned how a person can sacrifice for others and that learning is something that I practice even today. Sacrifice is the best way to learn and be successful in life.

My second inspiration for a bank of this nature came from my interactions with vegetable vendors. In 2001, I took my first loan from SIDBI – for the happiness of these people.

It’s then that I realized that the banking process must be kept very simple – an A-4 size of paper is the document that is needed.

Your first ten recruits in the company were from the sections you catered to. Now, how has the recruitment pattern changed in Bandhan since then, if it has changed?

When I started an NGO, I was not able to attract people who would come to my organisation to work. When I gave an advertisement, I received 11 applications, but they weren’t really interested.

Then I selected people from rural areas with very simple education like higher secondary graduate with no first division or second division.

Later, I got a good number of people and we have given them a sort of an office cum residence and such people have built this bank. Yes, I believe that these people have changed my life and I truly honour them. Recruiting such people and building up an institution like this is an example for the country.

People who earlier were just earning Rs 800 a month from a grocery shop after years of work with Bandhan have now been promoted to various senior management posts.

Do you also recruit people from MBA schools?

Now we are recruiting from MBA schools like IIMs and ISB. Earlier, we were a small microfinance institution so had to recruit people from the ground level who were taken to the top level.

Do you think we need more such Bandhans of this kind?

I definitely believe that we need more Bandhans like us who can reach more customers. Currently, we have a customer base of 1 crore 65 lakhs.

But we are a big nation with more 130 crore population.

I believe that multiple Bandhan types of the bank should reach everyone. I hope that it will also help create some of the competition which will further help the banks to build upon their capacity and efficiency which can be utilised to reach out to more people.

Just like you, there have been many others microfinance like Muhammad Yunus in Bangladesh, here we have Vikram Akula, Vijay Mahajan etc. How different and similar are you from them?

I would not like to analyze the similarities or differences between us or them. We are always focused on our client base and our customers. How many of our customers are in need and on the basis of what sort of products and services we are able to develop and deliver is our major focus.

The trends of customer behavioural, business behaviour and personal behaviour are changing. So at Bandhan, we analyse the situation at the ground level and then make my policies which are the best fit for the future as well as the customers as well.

Traditionally, we make the policies from the top and implement them in the ground. Here at Bandhan, we are trying that how we can make the policies through the learnings from the ground and implement them.

Mostly Indian banks are headquartered in Mumbai. So do you think we need more banks headquartered in the East?

If you look back in history, Calcutta was the capital of India and first company was born in East India was also in Calcutta and many of the big companies were born in Calcutta like ITC, Standard Chartered Bank, SBI etc.

We were also born in Calcutta and we see it as a step towards financial inclusion.

Also, the eastern region is a financially excluded people and banking penetration is also low in the eastern region. Our network is also stronger in this area.

Yes, why not -- we need more banks’ presence here (in this region).

What do you think of the NBFC crisis?

After the Andhra Pradesh crisis, all banks stopped lending to microfinance institutions, except Bandhan Bank. So if any crisis hits the big organisations, banks take the conservative way.

In case of real estate, due to a slowdown in the industry, banks are not coming forward to fund it.

However, after IL&FS and NBFCs, such issues are affecting big organisations due to which they might face some challenges of funding.

Last year has been quite challenging for banking. Would you agree?

I may not agree fully.

I also feel the main focus should be given to the rural population which constitutes 70 per cent of the population. Only 34 per cent of the bank branches are serving in rural areas. 66 per cent of the bank branches are serving 30 per cent people. In terms of future growth and business opportunities, we should go towards the more rural population.

In terms of challenges, while recruiting people from MBA institutes, we find that they are not willing to go which affects our business growth.

We did recruit from rural areas and they are happily coming to urban areas.

Do you think one day we'll see that the bank branches and ATMs will disappear and the smartphone will become our bank?

It is already happening that people are using smartphones. So this trend is growing. But even now, people use the mobile transactions for small-ticket transactions. But people’s confidence is increasing.

What has been Bandhan’s experience with digitization among rural communities?

We are already providing them with mobile and Internet banking. We are also now educating them on financial literacy programme. But the challenge is that 65 per cent of people are frequently changing their mobile numbers. So when they change the mobile number and not update it with the bank so they cannot do the transactions. So, it will take some time before it stabilizes.

What are the life lessons are Leadership Lessons that one can learn from you?

I strongly believe in PHD – passion, hard work, dedication. This has been my life mantra. This is what I tell my folks, and the people I meet.

Bandhan is a fantastic example of innovation and entrepreneurship. Who after Chandra Shekhar Ghosh?

Many of the people have been developed in the Bandhan group. I have 34,000 employees. After me, I hope anyone can take forward the baton.

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