Bandhan appoints Deloitte as consultant for banking foray

India’s largest microfinance lender, Bandhan, has appointed  Deloitte to prepare a roadmap for its banking foray. Deloitte was also the MFI's consultant for preparing its application for banking licence.

“We have appointed Deloitte as our advisor for this phase as well to help us in setting up the Bandhan Bank.While we understand that the transformation into a bank is likely to have challenges, we are suitably geared to meet these head-on,” said a press release from Banhan.

Deloitte would work with a core internal team of 30 members at Bandhan to prepare the blueprint over the next 18 months, said Chandra Shekhar Ghosh, chairman, Bandhan.

Earlier, Ghosh had said, Bandhan, would simultaneously open 600-700 bank branches, spread over 22 states, to mark its presence in the banking sector. The bank is expecting to open at least 10 million accounts in one go, as it forays into the formal banking sector after 18 months.

Bandhan  operates in 245 districts spread over 22 states (including one union territory), through a network of 2,016 branches.

On an average, the MFI disburses nearly Rs 1000 crore on a monthly basis, with monthly collections of nearly Rs 700 crore.  The MFI has a market share of nearly 25% in the sector.

 To convert into a bank,  Bandhan would be required to set up a wholly owned Non Operative Financial Holding Company (NOFHC) for banking operations, with a minimum capital of Rs 500 crore. At present, Bandhan has a capital base of nearly Rs 1100 crore.

According to RBI norms, the promoter capital holding should not be not less than 40% in the NOFHC, along with a 5 year lock in period. Progressive reduction of shareholding of promoter NOFHC is envisaged to restrict it to 40% for the initial 5 year period, to eventually 15% within 12 years.