The licence reinforces the belief in banking for financial inclusion: Chandra Shekhar Ghosh

Interview with chairman and managing director of the Bandhan Financial Services

Bandhan Financial Services, which was given a banking licence on Wednesday, hopes to come up with a unique business model, with a mix of doorstep and retail banking. Soon after securing the licence, Chandra Shekhar Ghosh, chairman and managing director of the microfinance institution, speaks to
Namrata Acharya about the company’s plans. Edited excerpts:

When do you expect to start banking operations?

We expect to start operations in a year. The Reserve Bank of India (RBI) has given us 18 months. The next step is to convene a board meeting and chalk the next strategy. Securing a bank licence is a big occasion for us, as it reinforces the belief in banking for the cause of financial inclusion.

Will you need to raise any capital for the banking foray?

As of now, I don’t think we need to raise any capital. We have reserves of Rs 1,100 crore, against the RBI mandate Rs 500 crore. But if needed, we can raise more capital. The board has to take a decision on this.

What will be the strategies of the new bank?

We will have to decide that. Our focus will be on financial inclusion. We will continue to service existing customers. In addition, we will be able to reach more micro-credit customers.

What will happen to Bandhan’s microfinance arm?

It will be merged with the bank.

You have been a microfinancier, working on a doorstep, ‘Grameen’ model. How different will the banking model be?

It will be a unique model. We will continue with doorstep banking and in addition, we will have bank branches.

What is Bandhan’s biggest strength and weakness?

Our biggest strengths are our reach in rural areas, our workforce and our efforts towards financial inclusion.

What is Bandhan’s biggest financial strength?

We have strong investors —International Finance Corporation and Small Industries Development Bank of India.

What are your profit estimates for 2013-14?

For 2013-14, we expect to record a profit of Rs 250 crore. Last year, the profit was Rs 200 crore.