Bandhan Financial Services, which was given a banking licence on Wednesday, hopes to come up with a unique business model, with a mix of doorstep and retail banking.
The Reserve Bank of India's 2024 norms for the voluntary conversion of Small Finance Banks (SFBs) into universal banks, particularly the subjective 'diversified loan portfolio' criterion, are proving to be a significant hurdle, with Ujjivan SFB and Jana SFB having their applications returned.
What is the reason behind this drying up of talent for the top post in private banks?
Ask rediffGURU and PF, MF and insurance expert Purshotam Lal your mutual fund, insurance and personal finance-related questions.
Ask rediffGURU Naveenn Kummar your insurance mutual fund and personal finance-related questions.
Bandhan Financial Services, the first microfinance institution in the country to win a bank licence, is also one of the youngest entities to be allowed to enter the banking space.
Bandhan Financial Services, which is to start banking operations soon, has received a combined equity commitment of Rs 1,600 crore (Rs 16 billion) from International Finance Corp (IFC) and GIC, Singapore's sovereign wealth fund.
All the existing microfinance businesses of the company and clients will be transferred to the bank
Bandhan has got fresh equity infusion of Rs 1,020 crore.
Bandhan financial Services will raise funds via internal accruals.
Other reputed firms like McKinsey, Boston Consultancy Group, PwC, Ernst & Young and KPMG had also applied for getting the mandate from Bandhan.
'If 99.99 per cent of these micro borrowers are good at repaying their loans, why can't we look at the SMEs and MSMEs and replicate the same model for them with our stringent risk management system,' Chandra Shekhar Ghosh, chairman and managing director of India's newest private sector bank, tells Prasanna D Zore/Rediff.com.
It is 10 years since Bandhan Financial Services became the first microfinance institution (MFI) to receive the universal bank licence. A year later, in 2015, it started operations. Bandhan's entry into banking was seen as a vote of confidence by the Reserve Bank of India (RBI) for the country's microfinance sector. Subsequently, the RBI awarded small finance bank licences to nine MFIs.
RBI's licensing norms require a bank to bring down promoter holding to 40 % within 3 years of operation - which, for Bandhan Bank, will be by Aug 23
Hiring activity has gained momentum in anticipation of upcoming festivals like Raksha Bandhan, Dussehra, Diwali, seasonal sales and the wedding season.
For India's leading MFI-turned bank, the challenge is to stay competitive while pricing its loans
Race for Asia's No. 1 MFI spot: Bandhan now closes in on Grameen Bank
Bandhan Bank said on Monday that it has been empanelled by the Reserve Bank of India (RBI) to act as an agency bank to facilitate transactions related to government businesses. The RBI's decision will help Bandhan Bank in contributing to nation-building, its MD and CEO Chandra Sekhar Ghosh said. The announcement comes months after a RBI guideline that authorised scheduled private sector banks as agency banks of the regulator for the conduct of government business.
'It's advisable not to go overboard on a banking sector fund or any other sector fund.'
Ask rediffGURU and PF, MF and insurance expert Purshotam Lal your mutual fund, insurance and personal finance-related questions.
The Kolkata-based firm already has a presence in 22 states with over 2,000 branches and 5.9 million borrowers.
Chandra Shekhar Ghosh started the micro-lending unit Bandhan in 2001 with only two employees in Howrah.
There are perks for banking with the newest bank in India.
South leads; North-East at bottom but moves ahead, finds out the IndiaSpend Team
Tata AIG, ICICI Lombard and Nippon Life have evinced interest for the profit-making insurance arm of Reliance Capital (RCap), joining several prominent financial companies from India and abroad in the race for RCap's assets. The final day to submit an expression of interest (EoI) was March 25 and the bidders will now get access to the latest information about RCap before they make financial bids.
Privately, many bankers admit their immediate goal is not growth but slowing the erosion of Casa deposits, reveals Tamal Bandyopadhyay.
The year 2014-15 could well go as one of long-pending financial sector reforms, expected to have a lasting impact.
Excess earnings of unlisted companies over and above their interest costs are at a record level. The interest-coverage ratio of 2.94 is the highest going back to 1990-91, according to numbers from the Centre for Monitoring Indian Economy (CMIE). The ratio measures earnings relative to every rupee to be paid as interest on outstanding debt.
With over Rs 15,000 crore in deposits, its strategy is a hit for now, but the real test will come when it starts lending to retail and corporate customers in a big way
Analysts on Wednesday welcomed the Reserve Bank's decision to grant bank licences to Bandhan and IDFC, but expressed dismay that only two of the over two dozen aspirants made the cut.
The Indian equity markets will soon account for over a fifth of a key emerging market (EM) benchmark tracked by funds with assets exceeding $500 billion. This development is expected to funnel as much as $3 billion into the domestic markets. Following the latest review undertaken by global index provider MSCI, India's weighting in the MSCI EM index will surpass 20 per cent for the first time, narrowing its gap with the current top-weighted China to fewer than 400 basis points.
Time opportune, with market buoyancy and entry of new entities
Bandhan expects to have a loan portfolio of Rs 14,500 crore.
Licence winners are expected to be announced by the first quarter of 2014.
The microfinance vertical of the bank will provide loans of Rs 80,000 to Rs 1,00,000.
AIBEA said that on April 19 its officer bearers would meet in Punjab to decide the next course of action.
India Post had applied for a bank licence under RBI guidelines issued on February 22, 2013.
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The RBI has accepted the application withdrawal request, according to the statement.
The Reserve Bank on Friday set up a three-member committee under former Governor Bimal Jalan to scrutinise applications for new bank licences, which are expected to be awarded by January.
Trading in the equity market this week will be highly influenced by a host of important triggers, with quarterly earnings from IT majors TCS, Wipro, and domestic inflation and IIP data taking the centre stage in dictating the movement in equities, analysts said. Besides, global factors and trading activity of foreign investors will also drive markets. "We are approaching the first quarter earnings season, with HCL Tech, TCS and Wipro set to report their earnings this week.
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