Banque Bandhan INTERVIEW | Will focus more on secured loans as it seeks to diversify the loan portfolio



Bandhan Bank announced its fourth quarter results on Wednesday.

Bandhan Bank expects it will take around four weeks for its microfinance collections to normalize after the nationwide lockdown is lifted, chief executive and CEO said Chandra Shekhar Gosh. In an interview with FE Mithun Dasgupta, Ghosh informs in the future that the bank would like to further diversify its loan portfolio by focusing on more secured loans. Extracts:

What percentages of your micro and non-microcredit clients have opted for the installment debt moratorium?

Gosh: For microcredit, a loan moratorium of 100% in value was opted for the month of April because we were unable to meet our microfinance borrowers for collections due to the confinement. About 79% of our microfinance borrowers have an average deposit balance of around Rs 3,070, which equates to more than four weekly payments. We are in constant contact with our customers by telephone. According to their comments, once the lockdown is lifted, it may take an additional four weeks for microfinance fundraising to normalize. About 87% of our home loan EMIs arrived in April, while 65% (in value) of SME disbursements arrived within the month. About 41% (in value) of the NBFC-MFI maturities have been paid. We are granting a moratorium on loans to NBFCs based on their demands.

Have you recently seen credit withdrawals in the microfinance sector as well as in the non-microfinance sector?

Gosh: We started our activities in the field of microfinance with the opening of offices in green zones across the country. We have disbursed a few microfinance loans, although the amount is very small. We will give more loans to our microcredit clients if they need it because we have known their credit history for a long time. We have not yet started new disbursements in the non-microcredit sector (after the imposition of containment).

What time do you see new loan disbursements in the non-micro segment?

Gosh: It will depend on when the lockdown is lifted. After restarting operations, clients will review their cash flow conditions. Depending on this, they will call for new loans. It will depend on a lot of factors.

What is your bank’s outlook on asset quality during the first half of this fiscal year?

Sunil Samdani (Financial Director of Banque Bandhan): This will depend on regulatory guidance and the situation on the ground. The sooner the confinement is lifted, the faster we will return to the pre-confinement period in terms of collections from the different sectors. Until that happens, there will be requirements for RBI and government support. The moratorium on loans helped.

Faced with the Covid-19 pandemic, what will Bandhan Bank’s approach be to develop its activity?

Gosh: In the future, we would like to opt for a greater diversification of our loan portfolio, a loan portfolio more guaranteed than the current portfolio. Today, about 62% of our loan portfolio is microcredit. We would like to focus more on the affordable housing and MSME sectors. In addition, we would like to opt for greater geographic expansion across the country.

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