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    Maybe there’s a challenge in urban areas but not rural: Chandra Shekhar Ghosh, Bandhan Bank

    Synopsis

    Income level in rural areas is gradually increasing, 60% of the data has not been captured.

    Chandra Shekhar Ghosh-1200
    The acquisition of mortgage financier Gruh Finance has helped Kolkata-based Bandhan Bank diversify its loan book, reduce promoter stake and also add new expertise to its business. The bank doubled its net profit, reported a jump in loan growth and maintained asset quality in the September quarter. Founder and CEO Chandra Shekhar Ghosh told Joel Rebello that strong rural demand, accumulation of new customers and gradual addition of new products will continue to power the bank forward. Edited excerpts:

    How is the macro picture looking for you? Your bank does not seem to be hurt by the slowdown.
    In the last two months I travelled in the east to south at the ground level without introducing my name to see for myself what is happening. I found that people are not worried in the rural areas. In the first two quarters, we always see a slower credit growth and it picks up in the third and fourth quarters which is normal.

    My advances have grown 37.7% in this quarter while micro credit has grown 35%, which shows rural areas are solid. Demand is increasing but supply is not there because there is still a paucity of credit network. People’s demand is also diversifying and they are looking at lifestyle products like mobile phones, fridges and TVs, so there is an opportunity.

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    Gruh will finance homes but they will also need utensils and furniture. So, there will be an opportunity in the future in rural India. Maybe there is a challenge in urban and metro areas but not in rural.

    Income levels in rural areas is gradually increasing but it is not captured by data and the size of the market is large — 60% of the data is not captured and they are not in formal credit. Then there is an opportunity also because 34% of people in our country are in the 15 to 35 age group and they will come into the market gradually. This is also a big market and we need to develop infrastructure for that.

    This has been a solid quarter for you. What was the highlight for the bank?
    It has to be that we have added 1 million (10 lakh) customers this quarter. In the whole of last year, we had 23 lakh micro credit borrowers and this year we have added 10 lakh customers in one quarter. There may be some overlapping but adding 23% new loan takers is very good growth. This is not just portfolio growth but customers added. Out of 10 lakh customers we added, 1.5 lakh may be depositor customers, which is also very good.

    What is the outlook following the Gruh acquisition?
    I have been working with poor, low-income and rural people in the last 19 years. Their income has improved and they now need their own house, which we can now help provide. The demand for affordable housing is huge at 2 crore. We now have the expertise with Gruh. Their team is seasoned. They can now elevate to the next level. We have more than a thousand branches, which we can use, so automatically people’s demand can be fulfilled. Funding is not an issue as my deposit growth is 49%. So that is an opportunity for us. We will like to drive housing loans to our micro credit customers and also to other families in the villages. It will help me diversify. Our book was 85% micro credit and is now down to 61%.

    We will launch new products gradually. We have 720 employees in Gruh looking at one product and they can look at other products. Now the time has come for us to gradually provide the service for the family and not just customers. The three or five people in the family have different demands and we would like to fulfil their demand under one umbrella. I know their income and we continuously study it. Average source of income per family is also 2.1, up from one source per family, which means that their risk-taking capacity is increasing. My target is increasing the number of customers, which will automatically convert to business growth.

    You still have to reduce your promoter stake to 40% from 61%. What is the timeline?
    We have reduced our stake from 82% to 61%... and we need to reduce it by another 21 (percentage points). Last few months we have been working on the Gruh merger and have not thought about that. Now that the merger is completed we would like to think how we can strategically bring down the stake. We will update our situation with RBI (Reserve Bank of India). We have committed to comply with the RBI norms but we have not set a timeline.

    Have the RBI restrictions in terms of seeking permission to open new branches or freezing your remuneration had any impact?

    It has not had an impact from a business point of view. Whatever branches we have sought approval for from the RBI has been given to us. On remuneration freeze, you know that I have built up this institution as a passion and not only for commercial gains. I have not reduced my time because of this remuneration freeze. I have been passionately doing the work and I like it.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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