Bandhan Bank commenced operations on Sunday with the simultaneous launch of 501 branches, a loan book of Rs 10,500 crore and savings accounts totalling 1.43 million. Within a few hours of the formal inauguration, the bank had garnered deposits of Rs 80 crore and 60,000 new accounts. Of the new branches, 18 will be open all seven days a week. Of the 501 branches, 229 are in rural areas and 179 in unbanked areas. The bank will have nearly 70 per cent of its branches in rural areas, it stated. There are 19,500 employees. On borrowing, it has set a high base rate of nearly 12 per cent, against a cost of funds of nearly 12.5 per cent. Its borrowing from banks is about Rs 9,000 crore, which it expects to repay in the next two to three years. The bank is depending on aggressive deposit mobilisation to bring down the cost of funds over the next one year. In the next few months, the plan is to be aggressive in taking deposits, while going slow in lending. Thus, even as its lending rates are high, the bank is offering competitive deposit rates. Savings interest rates have been fixed at 4.25 per cent for deposits below Rs 1 lakh and five per cent for above Rs 1 lakh.
For term deposits, the maximum interest rate, between three to five years of maturity, has been fixed at 8.5 per cent, with an additional 0.5 per cent for senior citizens. “As and when we have enough deposits to bring down the cost of funds, we will reduce the base rate. We will pass on every reduction of cost of funds to the borrower, as and when it happens,” said C S Ghosh, managing director and chief executive officer. “We will continue to focus on rural and semi-urban areas. However, give us some flexibility,” said Ghosh, pointing at H R Khan, deputy governor of the Reserve Bank of India, present at the inaugural function. Ghosh did not elaborate on the relaxations Bandhan seeks from RBI. In response, Khan said in his speech, “Regulatory issues are being considered, and sympathetically.” The capital base is Rs 2,570 crore, against the regulatory requirement of Rs 500 crore. It is in the process of getting another Rs 482 crore from the multilateral International Finance Corporation and from the Singapore government-backed GIC. This will bolster its base to Rs 3,052 crore, translating to a credit risk-weighted asset ratio of 44.54 per cent, one of the highest in the sector. By the end of this financial year, the plan is to have 632 branches and 250 ATMs in 27 states. At present, it has about 50 ATMs. Bandhan says its corporate banking plans are on hold. “Corporate banking is a different kind of skill, which we are yet to develop. We will continue to focus on rural and semi-urban areas, particularly SMEs (small and medium enterprises),” said Ghosh. The integration of Bandhan's microfinance business with the banking one will take place through creation of two verticals at each branch level, for the microfinance and retail banking operations.
As of now the bank has nearly 19,500 permanent staff.