Bandhan Bank to add 250 banking outlets by the end of this financial year

After the relaxation given by the Reserve Bank of India (RBI) to Bandhan Bank for opening branches, it is looking to add close to 250 banking outlets (including doorstep banking centres, or DSCs) in the next one month.

The relaxation comes a relief for the bank, as the restriction on branch expansion was a penalty for not meeting regulatory norms of maintaining promoters’ holding at 40 per cent.

“Through this letter, the regulator has now recognised the efforts of the bank towards compliance. That is one signal given to us. That has been taken as a strength of the bank,” said C S Ghosh, MD and CEO of Bandhan Bank. "We will add 250 more banking outlets by end of March 2020."

At present, the bank has a network of 1,100 branches and 3,084 doorstep banking centres. Between March 2019 and December 2019, it had opened 23 bank branches and 70 DSCs. Another 195 branches were added on account of merger with Gruh Finance.

In 2018, RBI had barred Bandhan Bank from opening new branches without its approval and ordered it to freeze Ghosh's salary at the existing level over its failure to meet shareholding rules. A few months back, Bandhan Bank completed the merger of Gruh Finance with it, which reduced promoters’ stake to 61 per cent from 82 per cent. According to RBI’s bank licensing guidelines, the bank’s promoter has to have a stake not more than 40 per cent within three years of commencing the business. The deadline for Bandhan Bank was on August 23, 2018.

Yesterday the bank said in a filing to the exchanges, “Further to our letter dated September 28, 2018, we would like to inform that the Reserve Bank of India vide its letter dated February 25, 2020 has informed that though the Bank is still not in compliance with the licensing condition on dilution, considering the efforts made by the Bank to comply with the said licensing condition, it has lifted the regulatory restriction on branch opening, subject to the condition that the Bank ensures that at least 25 per cent of the total number of 'Banking Outlets' opened during a financial year are opened in unbanked rural centres.”

At present about 35 per cent of the banking outlets of the bank are in rural areas, while another 35 per cent are concentrated in semi-rural areas.

Ghosh said, going forward, the bank would focus on affordable housing and MSME loan portfolios. The bank expects to have at least 50 per cent of its portfolio in the affordable housing and MSME segments in the next three years. At present, close to 61 per cent of the banks’ books consists of microfinance loans.

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