Bandhan sees 37% growth in gross loan portfolio

For 2013-14, Bandhan, India's largest microfinance institution (MFI), has registered 37 per cent annual growth in its gross loan portfolio at Rs 6,200 crore, about a fifth of India's MFI sector.

Through the next year, Bandhan will consolidate operations, as it prepares for a foray into the banking sector. For now, the MFI wouldn't expand to new states and would target moderate growth of about 25 per cent, said Chairman and Managing Director Chandra Shekhar Ghosh.

Bandhan has about 5.4 million clients and its operations are spread across 22 states. In the past year, it acquired about a million customers. West Bengal accounts for about half of Bandhan's portfolio. In terms of the MFI's presence, West Bengal is followed by Assam and Bihar. It isn't present in southern states.

"As of now, we do not plan to expand in southern states, which already have a glut of banking and non-banking sources of finances. Our focus area will be financially-excluded areas," Ghosh said.

This month, Bandhan will complete a subordinate debt transaction worth Rs 160 crore with the International Finance Corporation, which holds 10.93 per cent stake in the company. Other stakeholders include Small Industries Development Bank of India, Financial Inclusion Trust and North East Financial Inclusion Trust. Ghosh owns about 1.8 per cent stake.

Last year, the MFI raised about Rs 3,700 crore through bank loans and closed a securitisation deal worth Rs 300 crore with banks. Ghosh said this year, the company would raise around Rs 3,200 crore.

Bandhan, which is banking on its strong reach and a network of about 13,000 field staff, is expected to start banking operations in about a year.

For 2013-14, Bandhan's net profit stood at Rs 250 crore, against Rs 200 crore for the previous financial year. This year, the MFI sector is expected to grow 30-40 per cent, with the overall MFI portfolio expected at Rs 28,000-30,000 crore, said Alok Prasad, chief executive officer, Microfinance Institutions Network.

After a crisis broke out in the MFI sector in Andhra Pradesh, West Bengal, Bihar, Uttar Pradesh and Tamil Nadu have emerged as the fastest-growing markets in the sector. Currently, West Bengal has the largest MFI branch network, accounting for about 15 per cent of the country's entire network.