buddhadeb halder
KOLKATA, 20 JUNE: Joining the race for banking, city-based micro-finance company Bandhan Financial Services will apply for banking licence next week.
Asked why it was so late in applying for the same while the RBI guidelines are in place since February this year, Mr Chandra Shekhar Ghosh, chairman and managing director of the company, said: "We were waiting for the final clarifications from the apex bank, which came only early this month."
According to the guidelines, entities or groups in the private sector wanting to get a bank licence should apply by 1 July to the Reserve Bank of India.
Bandhan has appointed consultancy firm Deloitte to prepare the application, he told The Statesman.
Mr Ghosh said: "Bandhan Financial Services, which is currently into small lending business, will be converted into a bank, which will be brought under a non-operative financial holding company (NOFHC)."
As per the RBI stipulation, companies getting banking licence will be required to create an NOFHC within 18 months of in-principle approval and bring its all entities offering financial services under the umbrella of the NOFHC.
"In our case, it will not be very difficult to do so since we have only one such company ~ Bandhan Financial Services ~ and it will be upgraded to a banking organisation," he said.
Another major challenge for the aspirants is that the new bank should have 25 per cent of its branches in un-banked rural areas in order to achieve the government’s objective of financial inclusion.
"We are also well placed in this regard, as 45 per cent of our 1,800-odd branches are in such areas and around 75 per cent of our branches are in rural areas," Mr Ghosh said.
Bandhan plans to convert 700 of its existing outlets into bank branches, while the remaining 1,100 will be ultra small branches working under the main branches, Mr Ghosh said.
Also against the regulatory requirement of having a net worth of Rs 500 crore for eligible entities, Bandhan’s current net worth is Rs 900 crore, which will go up to Rs 1,500 crore within a span of two years, assuming that it will take another two years to operationalise the bank, the chairman said.
Bandhan is targeting a credit disbursement of Rs 8,500 crore during the current financial year compared with Rs 5,500 crore during fiscal 2012-13, Mr Ghosh said.