Finomenal 2016 – Day 1:”Accessibility to funds is crucial”- Mr. Tamal Bandyopadhyay,Adviser, Strategy at Bandhan Bank Ltd. & Consulting Editor, Mint

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Mr. Tamal Bandyopadhyay, the author of Bandhan: The Making of a Bank took an interesting session on Bandhan Bank. He began with how Bandhan Bank was the brainchild of Chandra Shekhar Ghosh whose main idea was to make funds available to the poor & is more about entrepreneurship than about microfinance.

He began with how the Bank was launched on 23rd August, 2015 and mentioned about the founder who came up with this idea when he saw women vegetable vendors in Kolkata borrowing & then paying back a sum of 500/- along with interest of 5/-. This practice intrigued him and as he inquired more about this, he realised that it was more due to need of accessibility of funds. The vendors were willing to pay the nominal interest as this enabled them to have funds at their doorstep. The idea soon took shape and today, Bandhan Bank has about 2,022 branches and about 70 lakh customers. According to Mr. Bandyopadhyay, there are 2 types of entrepreneurship. First is E-Commerce wherein things are aggregated and funds are raised through investors. Second is businesses like Bandhan Bank which go beyond e-commerce & involve blood & sweat of people. And it is banks like these that make a difference in the lives of so many people.

There were several interesting anecdotes that he shared. Bandhan Bank got its banking license when no one believed that it would do so. In fact, the bank was even turned down by a major consulting firm when the firm was approached for advice. Further, the bank is considered very frugal in its operations and hence, it is very cost effective, has a high asset quality and a high return on equity. The difference between the funds it collects & disburses are deposited in a local bank. The bank has the lowest NPAs (non performing assets) of about 15 basis points i.e. for every 100/- lent, it loses about 15 paise, much lower than any of the private sector banks. Also, the customers of the banks, who are mostly women from rural areas have a strong sense of gratitude towards the bank.

The discussion was finally concluded with a Q&A session.

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