Bandhan Bank eyes bigger Maharashtra presence to tap rich depositor base

Bandhan Bank is looking west, particularly Maharashtra, in search of cash-rich depositors to bring down its cost of deposits.

Bandhan, which primarily provides high-cost micro-loans, would continue to focus on branch-based banking despite the adoption and promotion of digital banking.

"We are now looking at Maharashtra and elsewhere in the western region as people are cash-rich there. Till now, we are more concentrated in the eastern region from where 60% of my deposits come. But we now need customers with higher average deposits so that our cost of funds comes down. For that, we need to have a bigger presence in cities like Mumbai," Chandra Shekhar Ghosh, founder and MD, Bandhan Bank, told DNA Money.

With the lending rate for micro-loans at 18.5%, though lowest in the country, can be brought down further as costs of money has been coming down and alternative and cost-effective digital lending options become available.

Smaller deposit size per customer means higher cost for maintaining such accounts.

With 831 branches across the country, Bandhan now has 46 in Maharashtra including 11 in Mumbai.

"We plan to open 160 branches this year. While the new branches would be spread across the country, numbers in the western region would be highest," Ghosh said on the sidelines of opening of a retail store of Bandhan Creations, a foundation to promote artisans and weavers.

A bigger presence in Mumbai would serve another purpose of this new bank.

"It's important that the tag of an eastern regional bank doesn't get stuck on us. We are a universal bank with pan-India presence. So, a greater presence in the financial capital is important. That's why we opened a branch at Nariman Point last month to show that we have arrived," he said.

Branch banking and setting up more branch and customer interfaces are important for Bandhan despite the onslaught of digital mode of transacting money.

"Digital banking is welcome but I believe branch banking would continue to stay relevant, particularly for the kind of customers we cater to, low-income people and small business owners, who still find comfort in dealing with real people at branches."

Bandhan, in fact, has set up a training institute to impact specialised courses on branch and doorstep banking services as the bank has suffered attrition at a time when the shortage of experienced bankers is set to kick in.

"I see a human resource crisis hitting the banking sector soon. Close to 84% of general managers would be retiring over the next two years from public sector banks while 60% deputy general managers would retire. It's not possible to fill up these posts through internal promotions without compromising on quality. There wouldn't be much people left in the senior positions in these banks after two years," Ghosh said.

Every year, the training institute is likely to generate 200-250 graduates skilled in Bandhan's own way of banking where knowing customers, their habits and priorities goes much beyond filled-up KYC forms.

As for Bandhan Creations, Ghosh plans to set up 15 such outlets across the country within the next three years building on the current pool of artisans, weavers and in-house designers.