“As a strategy, we need to reach people who don’t have access to credit, so we try to focus on retail and reach areas where very few banks are present,” Chandrashekhar Ghosh said. , MD, Bandhan Bank. “We are looking to drive down the share of wallet of microfinance.”
Significantly, microfinance loans, which are normally priced above popular benchmarks compared to loans to other segments such as housing and MSMEs, have been impacted during the pandemic as collection efficiency has plummeted, leading to a deterioration in the asset quality of these industry-level loans. Good. 47% of Bandhan’s loan portfolio is in microfinance. But Bandhan’s collection efficiency improved to 99% in the March 22 quarter from 80% in the June 21 quarter, according to senior officials.
The conscious reduction in attention to microfinance does not mean they are slowing down microfinance, bank officials said. Currently, non-housing retail accounts for less than 2% of the bank’s loan book and that’s where the push will increase. While housing and MSMEs account for 27% and 28% of their loan portfolios respectively.
“In retail, besides housing, we are active in gold lending, two-wheelers, car loans and unsecured personal loans and these will be our focus areas in addition to MSMEs,” Ghoah said. “We also see many borrowers migrating from micro to MSMEs as businesses. Gradually, we see the share of microcredit falling to 26% by 2025”.
The private sector lender intends to diversify into new geographies and add more than 500 branches, mostly in semi-urban and rural areas beyond eastern India, most likely in UP and South India. “We plan to tap into semi-urban and rural areas of these states where borrowers are heavily dependent on lenders.” said Gosh. The situation, public order and business environment have become very conducive for business expansion, according to Bandhan officials. The bank reported a net profit of Rs 1902.3 crore as loan recoveries improved and provisions fell in the March 2022 quarter. The bank had reported a profit of Rs 103 crore in the same period of the previous year.