Recently Bandhan Bank started its operation across the whole country. It started with 501 branches. 501 is considered "Shubh Number" in Hindu Mythology i.e. a lucky denotion. Whenever we came across any relative, they used to give us 501. 1001 or any number like this. It might be the luckiest start for the bank and moving forward, we will see this bank rising. Today we are going to look back in history and will see the evolution of Bandhan Bank.
Bandhan (meaning togetherness) was born in 2001 under the leadership of Mr. Chandra Shekhar Ghosh, a Senior Ashoka Fellow. The main thrust of Bandhan is to work with women who are socially disadvantaged and economically exploited. Bandhan works for their social upliftment and economic emancipation. To achieve the above objective, Bandhan was basically engaged in the delivery of microfinance services to the poor women.
Bandhan has been engaged in the delivery of microfinance service for the last 13 years. The model followed is individual lending through group formation. All microfinance activities are carried under Bandhan Financial Services Limited (BFSL), incorporated under the Companies Act, 1956 and also registered as a Non Banking Financial Company (NBFC) with the Reserve Bank of India (RBI).
Bandhan’s commitment towards triple bottom-line values is strongly asserted by its intervention in development activities. It believes that Microfinance is not the last word for development of the poor. Aspiring to holistic development of the poor, Bandhan offers development activities in crucial fields of education, health, unemployment, livelihood and the like through its not-for profit entity. Besides, Bandhan also has a program exclusively for the hard core poor (generally believed to be bypassed by microfinance).
"My commitment to the poor remains," said Ghosh. "They continue to be my focus and the bank would offer more services to them."
That's precisely the idea the Reserve Bank of India (RBI) has put forward as a prerequisite for permitting licences to third set of private banks in India — promotion of financial inclusion, and no one better than Ghosh, knows its true meaning.
More than half of India’s adult population is still unbanked. For many existing private banks, promotion of financial inclusion is a mere obligation forced by regulation and, for some, a fancy word. But for Ghosh, serving the unbanked segments of the society has been the mission of his whole life. Ghosh was born into a family of Bangladeshi refugees. Since his father had just his tiny sweet shop as the only source of income, Ghosh was raised with limited resources. Ghosh’s father struggled to give him good education, but some how managed to send the boy to Dhaka University to study statistics. It was in 1985, Ghosh started working for BRAC, an international development agency based in Bangladesh. The organisation trained him and appointed as a field officer in one of the most poverty-stricken areas of Bangladesh. Later, Ghosh involved himself with several NGOs working with the poor in West Bengal.
According to Ghosh, Bandhan will transfer all businesses and existing staff to the bank, which will cater to all sections of the society. Retail and rural banking will be the focus area of the lender, while large value corporate loans will not be pursued in the initial years. The existing microfinance business of Bandhan will be transferred to the bank under the category of microbanking. These loans will have size up to one lakh. With access to public deposits, Bandhan will lower the rate of interest to the borrower, Ghosh said. Bandhan has the backing of investors such as International Finance Corporation, Singapore's sovereign wealth fund, GIC and domestic investors such as Small Industries Development Bank of India. The bank has net worth much higher than the Rs500 crore stipulated by RBI for new banks.
In the run-up to becoming a bank, Bandhan has hired 850 banking professionals, in addition to its existing strength of 17,000 staff. In the race to becoming a bank, Bandhan has beaten some of India’s top corporations and industrial houses such as Reliance Capital, Bajaj and Birlas.
Ghosh is not really worried about the entry of new set of small finance banks and payments banks, a structure currently being finalised by the central bank. "We have gained a certain amount of experience in dealing with the small customer segment over years. There is no concern with regard to the arrival of new set of banks," Ghosh said. Ghosh may not be the conventional private banker or a billionaire entrepreneur you would expect to see in a new-age banker. He doesn’t have a management degree from a top university to boast of. But, there is immense confidence and honesty in each word Ghosh speaks with his distinct Bengali accent.
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