New Indian bank eyes Gulf NRIs

Bandhan has a licence for a universal bank and will cater to the needs of all customer segments.


Nithin Belle

Published: Thu 18 Jun 2015, 11:31 PM

Last updated: Wed 8 Jul 2015, 2:46 PM

Mumbai: India’s newest bank, being launched by microfinance major Bandhan Financial Services, is keen on targeting the Gulf NRI market, its chairman and managing director Chandra Shekhar Ghosh, told Khaleej Times.

“We hope to generate business from NRIs in various parts of the world, including the Gulf, which is always an important market for any Indian bank,” Ghosh said. “We would first like to explore this market and then consider having some presence.”

The Reserve Bank of India (RBI) last year approved licences for two new banks — one by Bandhan Financial Services and the other by IDFC Ltd. The proposed Bandhan Bank is expected to commence operations by September.

“We are awaiting the final approval from RBI even as we are readying ourselves to operationalise soon,” said Ghosh. “RBI granted the in-principle approval to us in April 2014 and has given us 18 months to transform ourselves into a bank. We are preparing ourselves and awaiting final approval from the regulator.”

IDFC, the other institution which has got the RBI’s approval, plans to start its bank by October. This is the first time in more than 10 years that India will see a new bank being launched; the last time that RBI had approved a licence for a private lender was for Yes Bank in 2004.

Bandhan has a licence for a universal bank and will cater to the needs of all customer segments, said Ghosh.

“We will be a bank for all, without diluting our focus on India’s massive unbanked population,” he added. “Along with bottom of the pyramid, we will also focus on the entire lower half of the pyramid, which includes micro small and medium enterprise (MSME), small and medium enterprise (SME) and our microfinance clients.”

The micro-finance institution, which has a strong presence in eastern and north-eastern India, has more than 6.5 million female borrowers.

According to Ghosh, only four per cent of the credit needs of the small and micro business segment is provided by the formal banking system. “We will offer finance to this group,” he said. “At the initial stage, we will not be in the space of corporate banking.”

The bank will start with around 500 to 600 branches spread across India. Bandhan Financial Services has a network of more than 2,000 branches that offer microfinance.

Ghosh said the new bank has ambitious plans. “There is no clash between having an ambitious plan and looking at steady growth,” he observed. “Our robust risk management system will allow us to combine the two.”

Earlier this year, Ghosh had announced that GIC, Singapore’s sovereign wealth fund, would invest $165 million in the company. International Finance Corporation, part of the World Bank group, is already an investor in the company.

“We are adequately capitalised,” said Ghosh. “Against the RBI stipulated Rs5 billion capital requirement, we have around Rs30 billion capital, which will help us to have a robust business growth. Our investors will always extend funds if we need. Besides, under the RBI norms, within three years of starting operations, a new bank has to tap the capital market.”

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