Bandhan Financial Services, the micro-finance outfit which has been granted provisional bank licence by the Reserve Bank of India, plans to tap the capital market for its banking entity by launching its Initial Public Offering (IPO) within three years of starting operations.
Bandhan, which has 18 months to start its bank operations as per the licence conditions, is in no hurry to go public and plans to firm up only after the second year of operations, when there could be a need to scale up activity.
''For the first two years we plan to study the market and watch our performance. In the third year we plan to grow for which we need to raise capital preferably through listing,'' Chandra Shekhar Ghosh, chairman cum managing director of Bandhan said.
The entity is adequately capitalised with Rs 1,200 crore capital, besides recently raising Rs 160 crore from International Finance Corp.
Its Capital Adequacy Ratio is also comfortable at 21%, much above RBI norms of 13% for banks, Ghosh claimed.
Till February, Bandhan had 52,33,000 borrowers serviced by 12,960 staff while loan outstanding was Rs 5,704 crores.
With an aim to convert a majority of its poor micro finance borrowers into bank account holders and with an ambition to finance education and healthcare projects targeted at these people and also small and tiny businesses, Bandhan feels conventional banks won't work, and would look at out-of-the-box ways to make its business viable.
''We would be lending money not against mortgages or collaterals but by judging cash flows, a parameter more relevant to us,'' Ghosh said while addressing members of MCCI Chamber.
Also, making its 13,000-strong staff spread across 22 states double up as ATMs who can disburse cash on spot are some of the innovations Bandhan is working on.
"A problem with poor rural people is that they easily trust others and would invariably share their ATM passwords and let others to withdraw money. So, putting up such machines wouldn't be prudent in those areas,'' Ghosh said.