Bandhan to kickstart ops next week after impressive inauguration on Aug 23

Chandra Shekhar Ghosh
The inauguration of last bank in Kolkata is a history now. It was about 72 years ago that in January 1943, foundation stone of The United Commercial Bank Ltd, now UCO Bank, was laid in Kolkata.

On August 23, when Union Finance Minister Arun Jaitley flags off the operations of 500 branches of Bandhan Bank on Sunday, it will be yet another milestone.

The event, expected to be attended by nearly 1,500 people, will bring some of the potential rivals, politicians, regulators and shareholders of Bandhan to one dais.

Apart from the Union finance minister, U K Sinha, chairman, Sebi, S K Roy, chairman, LIC of India, Deepak Parekh, non-executive chairman of HDFC Limited, Ashishkumar Chauhan, MD and CEO of BSE, Chitra Ramkrishna, Managing Director and CEO, NSE, Gary Norcross, President and CEO, FIS, heads of most public and private sector banks, representatives from IFC and GIC, among others will be present.

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However, as Bandhan starts operations next week, it is expected that in the initial few days, the bank will keep a low profile, without much hardselling of loan products.

The lending and deposit rates of the bank are likely to be in synch with market rates. The bank has kept its advertising campaign under wraps, but it is likely to be rolled out over the next couple of days, with its indoor and outdoor campaign managed by Madison Media.

"A bank focused on poor, will be a rich bank," says a person close to Bandhan.

The lending deposit rates offered by Bandhan Bank will be linked to market rates. "The lending and deposit rates cannot be off the market rates." according to a source at Bandhan. 

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The bank's deposit rates are already same as what most banks are offering. The savings interest rates has been fixed at 4.25% for deposits below Rs 1 lakh, and 5% for above Rs 1 lakh. 

For term deposits, the maximum interest rate, between three to five years of maturity, has been fixed at 8.5%, with additional 0.5% for senior citizens.

Bandhan Bank will be broadly divided into two verticals-the micro banking and general banking sections. In the last one and a half years, Bandhan has recruited nearly 8500 people, to be divided into the two verticals. The bank will be driven by nearly 850 bankers in the general banking section, apart from other staff.

The bank will have a paid up capital of nearly Rs 3,200 crore, which would include the last round of capital infusion of nearly Rs 500 crore before August 23 by multilateral financier International Finance Corporation (IFC) and the Singapore government-backed GIC.

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The two organizations had made an equity commitment of nearly Rs 1,600 crore in Bandhan Financial Services, in January this year. The bank will have a capital adequacy ratio of close to 34%. Bandhan Financial Services would be the non-operative financial holding company of Bandhan Bank.

In the next two years Bandhan plans to have nearly 1,000 bank branches and recruit nearly 3,000-4,000 more people. In the first year the bank expects a growth of between 20-30%, while adding nearly 4 million new customers, in addition to its existing 6 million rural borrowers, taking the total number of bank accounts to nearly 10 million.

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