Bandhan Bank diversifying both geographically and into non-micro credit: Chandra Shekhar Ghosh

“This year, is opening 530 branches; more than 80% of these branches are opening in the south, west and north. That should also help us to geographically diversify our portfolio and the liabilities,” says Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank

You are uniquely placed – both geographically and in lending to the MFI industry. Can you talk to us about demand and recoveries in that sector?
Of our total advances, 46% was in micro credit in the last quarter (Q4) but in the first quarter of this financial year (Q1), it has come down to 44%. This reflects our plan of diversification. Also, during the first quarter, all disbursements are seasonally muted. Further, a new RBI rule has been introduced for the micro credit household income. All in all, the first quarter has been a little bit slow in terms of disbursements.

After the second Covid wave of 2021-22, in the first quarter, whatever micro credit we have disbursed till 30th June 22, 99% of the customers are paying that back.

You said that you are diversifying. What are your plans with respect to geographic expansion that you are planning to do?
The diversification is in two parts. One part is in micro credit. It will be diversified non-micro credit. In the June quarter, there has been 27% year on year growth from housing loans. This is our focus area for future growth and more than 20% year on year growth of this portfolio can help us diversify from micro credit.

Other than housing loans, there is a retail business which also has given 61% year on year growth and SME has given 81% year on year growth.

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These are all the three verticals that we would like to grow in the future for the bank which can help to diversify the micro credit; 26% of micro credit will come on that.
Coming to geographical diversification, 47% of the branches are in east and we are trying to diversify to other geographies. In that sense, this year we have started this strategy to open more and more new branches in other states. This year we are opening 530 branches; more than 80% of these branches are opening in the south, west and north. That should also help us to geographically diversify our portfolio and the liabilities.

The rates in the system have gone up. Your NIM is at 8%. How do you expect NIMs from here on?
The rate increase was in the last quarter and they have already been impacted. After that, the bank NIM has come 8% NIM, which is our expected line of NIM. We feel that banks are providing two types of advances; one is linked with repo rate and when the RBI rate increases,it will automatically be passed on to the customer and so income is not impacted on that part. If it is a fixed income loan, the bank will decide on that and accordingly rate will increase. Also, new loans will come at the high rate. So we see that there is no big impact on NIM.

It is a quarter where most banks have been impacted on the treasury side. What about Bandhan Bank and also what will be the impact going forward as the interest rates continue to rise?
Treasury income loss in Bandhan Bank is very small because we do not have a very big treasury business. Whatever way the market is now moving, I hope that it will be recovered in this financial year.

Provisions have spiked on a sequential basis, any specific segment where you are seeing stress or foresee stress?
New slippages worth Rs 1,125 crore happened; last quarter that is the March quarter, it was higher at Rs 1,365 crore. So on one side, new slippages have come down on a quarter-on-quarter basis though it is the first quarter.

The second point is that the recovery is a little bit lower than the last quarter that means in the fourth quarter for that reason, there is a net NPA increase 589 crores which is normal out of the total book size is 96665 which is 0.5 to 0.6% so we see that it is a normal slippages has come on that, not in a big way the slippage has come.

Second point on that our portfolio is that the NPA is also restructured. In restructured loan, 57% customers are paying and among NPAs, 73% of the customers are paying. These people are taking some time because they are paying partially and when the time comes, they will recover on that.

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