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‘Our strength is our reach’

Chandra Shekhar Ghosh, the chairman and managing director of Bandhan Financial Services Private Limited, has a rush of visitors who are coming to witness the operations of his micro-finance institution, which has got the Reserve Bank of India clearance to operate as a full-fledged bank.

On Wednesday, Helen LaFave, the US consul-general in Calcutta, visited Rajarhat’s Narayanpur village, where the micro-finance institution has been running its business for eight years. LaFave also visited a primary school that Bandhan runs in North 24-Parganas’ Ganganagar.

Bandhan sources said Onno Ruhl, the country director of World Bank, would come calling on July 10.

The micro-finance institution, which reported a net profit of Rs 208.5 crore in 2013, has become a talking point in the world of banking and finance since it got the banking licence earlier this year.

LaFave made it clear that she was keen to know more about the institution. “I am very impressed with the kind of work they have done. I have been reading about them for some time and wanted to see their operations,” said the consul-general.

On the sidelines of LaFave’s visit, the bankman spoke to Metro about his plans and for the new bank.

Metro: What are your plans for the new bank?

Bankman: We will create savings accounts for the people who took loans from us. Till now they only got loans from us, but now they will be able to open savings accounts in our banks.

Metro: In which stage is the bank-formation now? What is the state of your preparedness?

Bankman: We are in the process of upgrading our technology. We only had expertise in extending credit and the IT system in our offices were designed accordingly. Now that we have to offer savings and other services, we need to upgrade our technology.

Metro: When will you start your banking operations?

Bankman: We will start operations by the end of the first quarter of the next financial year. In any case, we have to start by October, the deadline set by the Reserve Bank of India.

Metro: To run banking operations you will need additional staff. When will you start hiring people?

Bankman: We will invite applications for the junior positions in July. Ex-bankers will train the junior staff at our eight training facilities. Since it will take some time, we will start recruiting next month.

We also have plans to use some of our current 13,000-workforce for the banking operations. Right now we are undertaking a screening process to determine who among our present staff can be used for banking operations.

Once we are done with the task, we will be able to determine how many people we need to hire from outside. This recruitment, of people with the experience of working in banks, will take place at a later stage.

Metro: How many branches are you going to start with?

Bankman: We have plans to start with 600 branches. Fifty per cent of these will be in Bengal. To run these 600 branches, we will need about 2,500 people.

Metro: What are your main challenges?

Bankman: Electricity is a big problem. The RBI has made it mandatory to open at least 25 per cent of branches in unbanked areas. Out of the 600 branches we are going to start with, 42 per cent will be in unbanked areas. But to run bank operations we need uninterrupted power, which is not available in many of these areas. I had raised the issue in front of finance minister Amit Mitra at a recent programme. It is a bigger problem in Bihar. We have to find out a solution to this problem.

Metro: Many banks are saddled with their non-performing assets. You are saying you will set up 42 per cent of your branches in unbanked areas where banking will be new to the people. Are you not worried about recovery of dues?

Bankman: We spend more money on human resource by sending our staff to people’s doorsteps. The trust that builds helps in loan recovery. Also, we run a good check before granting loans. Later, we monitor the use of the money.

Metro: Are you contemplating any new products to compete with other banks that have an entrenched customer base?

Bankman: Not immediately. Our strength is our reach. I do not think any bank will have the reach to the remote areas where we will take our branches. Besides, our staff will visit each village once a week and collect deposits as well as enable people to withdraw money from their accounts. In case of an emergency, they can always visit the bank and get their work done. There is a big gap in services. If we can fill that gap, we will not need to worry about competition.