BENGALURU: Private sector lender Bandhan Bank, which recently completed the migration of its core banking system and internet banking to a new platform, sees increasing preference for digital banking among its customers.
“About 95% of our customers use digital banking. In urban areas, every corner there is a bank branch, but accessibility to bank branches is far in rural areas. Mobile banking plays a significant role here as they can make use of all features of the bank through their mobile phones. We also offer paperless loans to micro credit customers where there is no requirement of signature,” Chandra Shekhar Ghosh, Managing Director and CEO of Bandhan Bank said.
The bank’s digital transaction volume increased 47% year-on-year in the second quarter of the current financial year, and UPI transactions through the bank increased 63% y-o-y.
In an interaction with TNIE, Ghosh, who was in Bengaluru to attend an international symposium, organised by IIM Bangalore, said with the new system, the bank will be going solo in credit cards from March next year.
The Kolkata-based bank is also focusing on diversification of asset portfolio. Ghosh said by the end of FY26, the bank wants to increase the share of housing loans from the present 25% to 30% of the total loan book and in the case of group loans, from the present 33% to 26%.
The bank posted a whopping 245% jump in its net profit to R 721 crore in the second quarter for this fiscal and its NIM (net interest margin) stood at 7.2% in Q2 (Compared to 3.43% of SBI and 4.53% of ICICI Bank).
Focus on unbanked and underbanked
Of its total branches, 71% are in rural and semi-urban areas. Ghosh says semi-urban and rural areas also require the same financial services that are present in metro and urban areas. The bank’s focus remains on the unbanked and underbanked population and it sees as well as clocks more growth in these areas.
When Prembati from Mathura, UP, borrowed R10,000 from the bank a few years ago, little did she know that one day she would become a successful entrepreneur, earning a profit of R65,000 -R70,000, which is almost 10 times of what she was earning before.
In her late 40s, Prembati is into manufacturing of clay products and employs about 20 people. Now, she has increased the loan amount to R1,80,000. The bank, which has many such stories to share, provides microfinance loans anywhere between R10,000 and R1.5 lakh to women borrowers without any guarantee or collateral. This is mainly given to women to start as well as scale up their business. So far, 2 crore women have been benefited. Almost two-third of the bank’s customers are women and Ghosh says women are the CFO of the family and stresses on the need to increase women’s financial empowerment.
H2 Fy24 growth will be higher
Talking about important indicators for growth including controlled inflation rate, Ghosh sees growth in the second half of this fiscal as the first half is seasonally weak. GDP growth will also increase and this will in turn increase employment generation. Though there is little bit of volatility if oil prices increase, otherwise all parameters are good for the BFSI sector, he says. The bank has added nearly 10 lakh customers in the second quarter and it has over 3.17 crore customers.
It employs over 74,300 people. Recently, RBI Governor Shaktikanta Das said attrition is seen to be high at some private sector banks and that the central bank is watching the issue closely. Ghosh said business is growing and that people are moving from one bank to the other and that has been happening in the banking industry.
After the pandemic, a couple of new NBFCs have come and also UPI transactions have grown drastically with dominant players such as Google Pay and PhonePe. Ghosh says they are recruiting people from banks, and this will not continue and it is just a one-off thing. According to him, there is enough talent in the banking industry.