Bandhan Bank to focus on affordable housing post takeover of Gruh Finance

Lender bets on MSME sector as well, starts co-branded credit card with Stan Chart

Apart from the traditional area of microfinance, affordable housing will be another major growth areas for Bandhan Bank going forward. This apart, micro small and medium enterprises (MSME) will also be a focus area.

Speaking at the fourth anniversary of Bandhan Bank, its MD and CEO, C S Ghosh, said following the takeover of Gruh Finance, affordable housing will be a major area of growth for the bank. 

Notably, Bandhan Bank has largely remained focused on microfinance since inception. So far, its experiment with corporate loans had not been very encouraging. The bank has already burnt its fingers in IL&FS crisis, and had to make provision of Rs 385 crore towards the loan.

In January this year, the bank announced its merger with Gruh Finance, the affordable housing finance arm of HDFC ltd. The merger would also help the bank reduce promoter shareholding from nearly 82 percent to 61 per cent. The bank is required to bring it down to 40 per cent to meet RBI norms.

According to Ghosh, Gruh’s 195 branches and 700 employees  would, along with an experienced team, will help the bank establish its presence in the affordable housing segment and it is an area in which the bank would be “happy to grow in future”.

According to Ghosh, the final NCLT approval on the merger is expected very soon.

Co-branded credit card with Stan Chart 

Tapping into Bandhan Banks’s four million customer base at its bank branches, Standard Chartered Bank has launched a co-branded credit card with Bandhan. 

Under the collaboration, while Standard Chartered bank will take the credit risk, the credit cards will be offered exclusively to Bandhan bank’s customers. Bandhan will be responsible for identifying and issuing the cards to its customer. 

According to Zarin Daruwala, CEO, Standard Chartered bank, Bandhan’s impressive current account and savings account (CASA) growth spread across 1,000 branches has been one of the factors leading to the collaboration.  

At present, Standard Chartered bank has 100 branches in India, and a credit card user base of 1.2 million, growing at the rate of 15-20 per cent a year.

CASA accounts for about 36 per cent of Bandhan’s total deposit base of Rs 43,000 crore, said C S Ghosh, MD and CEO of the bank.

Bandhan Bank has launched three variants of co-branded credit cards called One, for the mass market, Plus, for the affluent segment, and Xclusive, for the premium.

According to Daruwala, the lower and the middle level segments, One and Plus, would constitute an attractive segment for credit cards, because of revolving credit in the segments.

At present there were no signs of stress in the credit card segments, neither in terms of growth nor in terms of delinquencies, she said.

This is Standard Chartered’s first co-branded credit card with a bank.

“When we started the bank four years ago, we began with basic products. We kept adding more products as we moved ahead. Today, we launch credit cards, a product that many customers demanded from us,” said Ghosh.

In all, Bandhan has 4,014 banking outlets, including doorstep banking services encompassing microfinance customers. The total customer base of the bank  is 17.4 million.