MFI Bandhan applies for banking licence

The country’s largest microfinance today applied for a full-fledged banking licence. The MFI, which has about 4,6,00,000 borrowers, controls about 22% of the microfinance space in India. The MFI has a paid-up capital of Rs 1,000 crore, against the regulatory requirement of Rs 500 crore, said Chandra Shekhar Ghosh, chairman, Bandhan.

Once the MFI converts into a bank, it will be able to slash interest rates by 10%, against the present rate of about 22%, added Ghosh.

Bandhan has about 1,804 branches across India, with about 50% concentrated in West Bengal. The MFI has sought conversion of all the MFI branches into bank branches.

“We intend to cater to about 2,50,00,000 borrowers by 2020. The basic model of banking will remain the same in rural areas,” said Ghosh.  

With an employee base of about 1,200, Bnadhan has already started training staffs for banking services.

Earlier, the MFI had appointed  consultancy firm Deloitte for preparing blueprint for banking foray. It had also  inducted two new board members from the banking sector, including V K Chopra, former chairman and managing director, Corporation Bank.