Your Bank is about to turn five. In this brief yet fulfilling journeythe Bank has established itself as a caring and customer-focussed organisation with acomprehensive range of products and services keenly focussed on customers' needs. YourBank was established with inclusive banking at its core and to achieve that the Bank hasmade available mainstream financial services to the unbanked and under-banked people ofthe nation. What has helped the Bank in its stride forward is a deep understanding of itscustomers a robust technology product and service efficiencies a truly committed andcapable workforce and the core values on which the Bank has been built.
The pre-COVID scenario
In the pre-COVID period the Indian economy faced strong headwinds withgrowth numbers dipping for four quarters. Credit growth was also tepid and the liquiditycrunch continued to be experienced over successive quarters. Bandhan Bank howeverremained on its growth trajectory in a measured and calibrated manner. The quality of theasset book has also been praiseworthy.
The COVID-19 effect
The financial year ended with an unprecedented situation. The COVID-19pandemic and the countrywide lockdown to limit its transmission has had an adverseimpact on overall economic growth. Domestic consumption and private investment spendinghave weakened considerably.
India's reaction to COVID-19 pandemic was quick and the measures werestringent. The early and sudden lockdown ensured the primary containment of the pandemic.Given what other countries faced the lockdown seems to have been the right decisionthough it came at a significant cost. The disruption was severe and the impact was felt bymany.
The Government of India and the Reserve Bank of India came up withproactive and bold set of policy measures to help people the industry and the economy.These measures were aimed at supporting a lot of businesses rather than a few large onesalone. A special budget was allocated to support the economy aimed at helping a lot ofsegments of the population including those at the bottom of the pyramid. The actions wereaimed to bring immediate relief. The benefits of these measures will be available to alarge number of industries including micro small and medium enterprises. Some of thesemeasures aim to equip the population with tools that can nurture the spirit ofentrepreneurship. The Reserve Bank of India has also focussed on avoiding a liquiditycrisis in the wake of the lockdown. The lowering of the repo rate to the lowest in adecade and the slashing of the Statutory Liquidity Ratio (SLR) were key steps in thatdirection. The impact of the policies will be realised gradually in the medium to longterm depending on how well they are executed.
The lockdown came as a shock to almost all businesses. However giventhe dependence of the smaller enterprises on local supply chains the disruption in thissegment was contained to some extent. With the gradual lifting of the lockdown they arein a better position to quickly bounce back since the goods and services they producetypically cater to the basic demands of the population they serve and do not constitutediscretionary demand. Also the local supply chains are better placed to rapidly achievefull functionality than the complex large supply chains.
Other than the immediate impact of the pandemic and lockdown therehave been some developments which seem to be here to stay for a while. For instance theurban-rural equation has changed. Many workers who had moved to urban centres to earnlivelihoods have returned to their places of origin and are determined to earn theirlivelihoods locally from home. In such a scenario your Bank is in a good position withthe significant presence in semi-urban and rural centres which will enable it to servethe growing local needs. The early efforts of unlocking have surprised us favourably. Aswe move forward we will have to learn to recalibrate ourselves on a regular basis andmore often than in the pre-COVID times.
Continuing the Bandhan agenda
Bandhan Bank is committed to its goal of inclusive banking workingtowards making formal banking a habit and taking that habit to the remotest corners ofIndia and different crosssections of people. This is a bigger responsibility for the Banknow given the impact of the pandemic we are witnessing.
What works in your Bank's favour during these challenging times is itsdemonstrated ability to run a full- service value-based bank with a well-formulatedstrategy for expanding inclusion and a culture of compliance and integrity. The socialimpact that the Bank's operations have had on its customers has helped create adifferentiated positioning of its brand image.
Enabling wealth generation
For the holistic development of any nation both economic growth andthe overall development of people have to go hand in hand. In terms of Gross DomesticProduct (GDP) India ranks number 7 in the world with France and the UK being thecountries with an immediately higher ranking than India. However in terms of the HumanDevelopment Index (HDI) we are at number 130 in the world with countries like Namibia andTajikistan as the ones ranked just above us. Only when we rise both in HDI and GDP wewill be able to really see a prosperous and happy nation.
Using the 'trickle-up' effect your Bank is helping its customersgenerate higher incomes thereby creating wealth where it is needed most. With a belief incommunity development the Bank has been able to create millions of entrepreneurs who inturn provide employment to others. Even if one job is created by each of the small loanborrowers of your Bank jobs must have been created for at least one crore people. TheBank also runs various development programmes in the field of livelihood promotioneducation health employment generation and financial literacy which help participantsachieve their dreams and goals.
Towards modern banking
Though your Bank is about to complete five years of operations as auniversal bank it still seems like the beginning of the journey. Your Bank is focussed onstrengthening the various pillars of business and continues with its key objective ofbeing a Bank for all thus ensuring progress for all. Your Bank has created a successfulbusiness model that is based on varied and value-added product offerings simple yetrobust processes and a consistent focus on relationship development. Your Bank'slong-standing track record and inherent franchise strengths like customer loyalty andhi-touch model are helping it navigate the current environment. Moving ahead the Bank isconfident of continuing along its growth trajectory driven by the trust that allstakeholders have placed in it and the strong foundation the Bank has built in these fiveyears.
Overall the Board is pleased with the Bank's performance in FY2019-20 a period of significant uncertainty in the macro-economic and social environment.There is still much work to be done though as your Bank continues its tireless efforts toimprove returns for its shareholders delivering better service for its customers andtaking inclusive banking to the next level.
Dr Anup Kumar Sinha