Contact Your Financial
Adviser MONEY MAKING MC
07 July 2016
 |
| BB(The Total Investment & Insurance Solutions) |
Bandhan Bank has transitioned well from a
micro-finance institution to a bank after commencing banking operations in
August 2015. Brokerage firm Religare has come up with some interesting insights
on this unlisted Kolkata-based bank based on its annual report. The Total Investment &
Insurance Solutions
Up to March 2016, it had garnered Rs121
billion of deposits. Out of these, current and savings account (CASA) deposits
stand at Rs26 billion. Banks accounted for around 35% of its total deposits.
Bandhan Bank has a stellar savings account (SA) deposit ratio of 20%. It has
issued 77 lakh debit cards up to now.
On the flip side, there is a concentration
risk with respect to deposits as the top 20 depositors constituted 30% of the
total deposits. Another problem for the bank is that the savings account
balance per account is low. After doing some number-crunching, Religare
estimates that the average balance per savings account for the bank is at a
little more than Rs3,000. This low ratio impacts profitability as the operating
costs of these accounts is high in comparison to the income generated.
Coming to the loan book, agriculture and
allied loans constitute more than half of its total loans. Currently, its small
and medium enterprises (SME) loans stand at Rs65 crore. These constitute merely
0.5% of the total loans. It intends to focus on SME loans with a ticket size of
Rs1 lakh– Rs10 lakh and retail loans. Its retail loans stand at Rs60 crore i.e.
0.5% of the total loans. The Total Investment & Insurance Solutions
Its return on equity (RoE) stands at a around
17% on an annualised basis, while its return on assets (RoA) is at 3.8%.
Currently, around 1/3rd of its total branches are situated in urban regions.
Its future plans include opening of 180 new branches by March 2017. The
majority of its new branches will be opened outside West Bengal. The management
plans to brand the bank as a pan-India bank. The bank is experimenting with
low-cost small format branches in parts of West Bengal and Bihar in order to
reduce operational costs. These branches will have minimal staff and will
largely restrict themselves to deposit-taking and withdrawal of money. The Total Investment & Insurance Solution
Bandhan Bank, which was set up as a
micro-finance company in 2001, received a banking license from the Reserve Bank
of India (RBI) in 2014. Some of the investors in the Bandhan Bank include World
Bank Group's International Finance Corporation (IFC) and Small Industries
Development Bank of India (SIDBI). The
Total Investment & Insurance Solution
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