Kolkata-based microfinance institution (MFI) Bandhan, expected to foray into the banking sector by September 2015, will evaluate the need for equity infusion by December this year.
Although Bandhan has a capital base of about Rs 1,500 crore, it might need an equity infusion for future growth, C S Ghosh, chairman and managing director, Bandhan, said on the sidelines of an event at the Bengal Chamber of Commerce and Industry. According to Reserve Bank of India norms, a bank should have a capital base of at least Rs 500 crore.
The MFI is holding informal talks with existing investors, International Finance Corporation (IFC) and Small Industries Development Bank of India (Sidbi), for further capital infusion, Ghosh said. "As of now, there is no urgency, as we are adequately capitalised. We will decide if we need more capital or not, based on our business plan, which will be finalised in December. We are in talks with our existing investors like IFC for more equity but a final call will depend on our business plan."
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At present, while IFC holds close to 11 per cent stake in Bandhan, Sidbi holds about 10 per cent. Ghosh owns 1.8 per cent stake while two trusts, the Financial Inclusion Trust and the North East Financial Inclusion Trust, hold the remaining stake. According to regulations, both IFC and Sibdi can increase their stake to up to 20 per cent, Ghosh said.
"As of now, we have not examined any proposal to invest further in Bandhan. We will need to look at various regulatory requirements before thinking of increasing our stake," said M K Maini, deputy managing director, Sidbi.
In the first year of its operations, the proposed Bandhan bank has set a moderate growth target of 15-30 per cent. "In general, MFI operations are growing at the rate of 30 per cent. In the banking sector, the growth is between 15-20 per cent. Our target is to grow between 15-30 per cent," said Ghosh.
This apart, Bandhan would need to list its shares in the capital market by 2018. According to RBI guidelines, a bank will have to get its shares listed on the stock exchanges within three years of commencement of business. The bank is expected to commence operations before September 2015 by opening nearly 600 branches in one go.
Bandhan has 2,116 branches in 22 states and a loan outstanding of nearly Rs 6,200 crore. On an average, the microfinance institution disburses Rs 1,000 crore a month and its monthly collections are nearly Rs 700 crore. At present, it has a share of nearly 25 per cent in the microfinance market.