BANDHAN BANK---INCLUSIVE BANKING

BIKASH CHOUDHURY

23 August 2015 would go down in the history of Indian Banking with the Inauguration of Bandhan Bank---149^th schedule commercial bank. It is Historic because RBI in its wisdom has taken the second initiative after Regional Rural Bank to make the banking services available to uncovered or under covered rural areas and demography with granting a commercial banking license to Badhan Bank; whose focus would be SME in Rural & semi-urban areas. Badhan Bank is starting with a capital of Rs.2570 Crore, little over five times of the RBI new norm; and, it has 501 branches, 2022 service centers and 50 ATMS across 24 States and has plan to scale up to 632 branches,250 ATMS in 27 States in next 18months(by 31March 2017).

                             It would have been much better if Bandhan Bank concentrated on the eastern region of the country with a strategy to saturate the demand for banking services in the area and captured idle cash sitting in rural homes (in RBI assessment 42 % of the total Idle cash remain in rural areas) and met the financing requirement of new social groups and youth apart from its traditional base of women self help groups and NGO. It could have claimed some viability gap funding from central govt. for bringing Idle cash into the mainstream in the entire eastern region. Since, Bandhan Bank has its strong base in the region; it could have scaled up much faster to completely cover approximately over 1.5 lakh villages in next 5 years and captured the benefit of economies of scale and lower span of control to manage the cumbersome and mammoth banking operations. This certainly could have created an economic multiplier effect and push up our GDP by 0.5-1 %. In contrast, spreading the Banking operation of Bandhan Bank thinly across the country would push the cost of operation quite unnecessarily and would result in faster burn out of valuable and expensive capital; thus, repeating 3 mistakes of Regional Rural Bank (Gramya Bank) in their lives.

In India we rarely understand the satisfaction of completing a task; rather, enjoy keeping a few half completed or uncompleted tasks which is a bane of Indian mindset that holds up the country from faster progress and advancement; be it in technology or business.                            

                                  There is a huge opportunity for Bandhan Bank to be able to spruce up our rural economy by adding Agricultural & Agro Consulting Division to its operation to offer practical guidance to farmers with their crop plan, its processing, storage and marketing with deployment of suitable technology at a fraction of the cost of public sector banks and at the same time could add an additional revenue stream to its existing portfolio. Over a period of time Bandhan Bank could also attempt to create entrepreneurs in rural areas in the domain of food processing, warehousing, cold storage and logistics. In five years from now Bandhan Bank could turn out to be one of the largest and most profitable commercial banks of the country knowing the virgin market and untapped potential of a universal bank at a lower transactional cost.