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Bandhan Bank plans giant leap into retail lending as part of its evolution as universal bank


Kolkata: Private sector Bandhan Bank plans a giant leap into retail lending as part of its evolution as a universal bank with a five-year business plan.

The predominantly microfinance lender would now go all out in car loans, two-wheeler loans, consumer durable loans to raise its stake with urban and semi-urban middle class borrowers, managing director Chandra Shekhar Ghosh told ET.

The Kolkata-based lender has recently hired Tata Capital’s former retail asset head Vineet Tripathi to drive the new business lines. Tripathi’s social media profile shows that he joined the bank in August.

Ghosh said the bank would now energise its 1045 branches to push retail loan products, unlike in the past when branches were merely used to grow liability businesses.

Retail lending contributes a mere 1% to Bandhan’s loan portfolio, while micro loans contributes 61%. Its housing loan portfolio accounts for 26%, loans to small and medium enterprises 7%, loans to non-bank lenders including microfinance companies 5%.

“The bank is gearing up for the next level of structural transformation toward a true universal bank like large private peers by re-organizing business verticals and leadership positions either by hiring laterally or up-skilling,” said Anand Dama, analyst with Emkay Global Financial Services.

As part of Bandhan’s new leadership team, Tripathi is heading retail assets other than housing, which will continue to be under Sudhin Choksey who joined the bank as part of its merger with Gruh Finance.

The bank also hired former Bajaj Capital chief executive Rahul Parikh as its digital head and former ICICI Bank executive Kumar Ashish for heading the “emerging entrepreneurs business” vertical, which consists of micro-banking, micro home loan and micro enterprise loans.

The bank disbursed Rs 1600 crore of retail loans during June which was 3.8% of total disbursement of Rs 42208 crore, largely driven by gold loans. Housing loan disbursement was Rs 10643 crore in the same period.

Bandhan has diversified its loan portfolio away from MFI as a part of its long-standing portfolio de-risking strategy, given the regular eventualities in this segment, product-wise as well as geographically, Dama said.

“Management believes that mortgage as a product not only increases the tenor of the portfolio (thereby slows portfolio rundown in low growth cycle) and reduces asset quality risk, but also brings with its entrenched and long-term relationship to cross sell asset and liability product base,” he recently said in a note to investors.

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