BS Banking Annual 2019: Bandhan Bank's future is digital, says C S Ghosh

'Most of our borrowers lack income proof. We are seeing how we can use IT to gather more information about them and take credit decisions', said Ghosh

Chandra Shekhar Ghosh tells Namrata Acharya that while Bandhan Bank will continue to focus on the brick-and-mortar infrastructure and high-touch model of banking, digital will help it evolve to the next level. Edited excerpts:

The Gruh Finance acquisition this year is a key event. How has it panned out?

We completed the merger on October 17, 2019, and it has added 195 Gruh branches to our network. In addition, we added 106 Gruh desks in our own branches. So now people get Gruh banking services in 301 Bandhan branches. Affordable housing is a huge segment. In three to five years, the ratio of the microfinance portfolio to non-microfinance, which is 60:40 per cent now, will change to 50:50. Affordable housing will diversify our books.

What have been the other turning points in your career as a banker?

The moment I got my first loan sanction letter from Small Industries Development Bank of India (Sidbi) was the best moment in my life. Two of our board members and I went to receive it. Afterwards, we went to a sweet shop to celebrate and took a bus home. The next big moment was getting a banking licence. I still remember the day. At 6 pm, after the Reserve Bank of India’s closing, we left. At 6:15 pm one of my colleagues called, and she could not utter a word beyond “Sir”. After that, phone calls of congratulations kept coming. Next morning, the then President Pranab Mukherjee congratulated me. He said, “I am happy that you got this. You deserved it.”

As a bank based in Kolkata, is getting good talent at higher levels a problem?

Not many people want to come to Kolkata. In the first few years it was a problem. As the bank is gradually becoming successful, this problem is resolved to a great extent. However, there are still limitations when compared to Mumbai.

What are your imminent challenges?

Most of our clients or prospective clients are in rural areas, where there are infrastructure challenges. It is a challenge to convince people to go to rural areas for work. The response is slow. Also, the supply of skilled manpower in the banking sector is not good enough. If we don’t focus on grooming future bankers, it will be difficult to find experienced mid- and senior-level staffs. 

How is Bandhan Bank gearing up to adopt digitisation?

Information technology (IT) is the best way to control the operations of a big organisation. But, if the high-touch model is abolished and replaced with IT, it will be a great risk. Most of our borrowers don’t have income proof. We are seeing how IT can be used to gather more information about them. We want to take credit decisions on the basis of digital data analysis. The future of Bandhan Bank will be a combination of digital banking and the high-touch model.

How about lending to large corporate entities?

Once we tried it, but we had a bad experience, so we have no plans in growing the corporate loan book.

Do your philanthropic ideals come in the way of investors’ interest?

It is difficult and uncomfortable when people talk in terms of loan portfolio, profits, margins, etc. We should see how many lives are changed because of Bandhan. I still spend time visiting villages, and interacting with my borrowers. Certainly, the frequency has come down. For example, last week I was in Shillong, talking to borrowers.

In Assam there have been protests against microfinance operations. What is the update?

The situation is under control. Microcredit has a big social impact. Sometimes people don’t understand this, and instead they raise issues regarding our profits. Also, if you work in a sector, you have to consider the practices of other lenders also. It leads to uncertainty.  

What impact did the RBI curbs on opening new branches have on lending? 

We have 1,009 branches, with 4,000 customers in each branch. We think we can increase the number of customers in some branches. In the first three to four years we went in for aggressive branch expansion. It will not be the same in future.  Whatever we decided, RBI curbs did not restrict it. This year we will add around 100 branches after RBI’s approval.

How has RBI’s freeze on your salary hike impacted you?

Work is important to me. God has given me a lot.

Is there a succession plan in the making?

Of course, there is a plan. A good number of teams are working on it, and they are grooming people who might take charge after me.