Bandhan Bank to raise Rs 500 crore from investors by March

Bandhan Bank is the Indian micro-finance entity to becomes a universal bank

Newly opened private sector lender Bandhan Bank is looking to raise Rs 500 crore from existing investors by the end of the ongoing fiscal to fund its business expansion plans.

"Rs 500 crore would be coming by the end of this financial year," Bandhan Bank CEO and Managing Director Chandra Shekhar Ghosh told PTI.

Bandhan Bank is the first instance of a micro-finance entity in India transforming into a universal bank. It received an in-principle approval from the RBI in April 2014 and the banking regulator's final nod on June 17, 2015.

The fund would flow in from existing investors that will help bank to expand its business and network, he said.

The existing investors include IFC, SIDBI and Caladium Investment Pte Ltd, a company managed by GIC Special Investments Pvt Ltd.

"Rs 2,700 crore is nearly in my book and other Rs 500 crore would be coming. With Rs 3,200 crore capital and capital adequacy ratio of 34 per cent, we can sustain growth for 3-4 years," Ghosh added.

The bank, which started operations on August 23, has 523 branches at present.

It plans to add 105 more branches in the next 5 months as part of its expansion drive.

"We would like to see 628 branches by end of March 2016," he said.

Around 70 per cent of the branches are in rural India while 30 per cent are in unbanked rural pockets with 83 lakh customers.

State-wise, West Bengal has the maximum number of branches, followed by Bihar and Assam.

When asked on whether lowering of small saving rate will help new banks, he said that it will make interest rate on fixed deposit more attractive and banks will be benefited as retail money will flow to banks.

The Finance Ministry had last week said it would review the small savings schemes, which includes PPF and post office deposits.

Bankers have been demanding lowering of interest rate on small savings as high rates on such government schemes make fixed deposits of banks uncompetitive.

With small saving deposits commanding a rate of 8.7-9.3 per cent, banks have been reluctant to transmit the entire policy rate reduction by RBI to the borrowers.

They want to keep their deposit rates attractive to match those in small saving schemes, which are popular among masses.