India turns micro-lender into bank
India opened its first private bank in 11 years that will focus on micro loans to give financial inclusion a boost.
Finance Minister Arun Jaitley inaugurated the bank -- Bandhan Bank -- in Kolkata yesterday.
Bandhan, a microfinance company, was converted into a full-fledged scheduled bank as part of the government's effort to better serve the country's unbanked population, the minister said at the opening ceremony.
Bangladesh Bank Governor Atiur Rahman attended the ceremony at an invitation from the bank.
Bandhan Bank should remain focused on inclusive finance and green banking given its heritage of a very successful microfinance institution, Rahman said at a pre-launch event on Saturday.
Bandhan is the first micro-finance company to be transformed into a bank. The bank got the final approval from the Reserve Bank of India, the banking regulator of the country, in June.
The bank will primarily serve daily wage earners and women running small business units -- the segments that had been its borrowers for a decade. The bank will also offer savings, remittance and insurance services.
"Our primary focus will be on the eastern region where banking penetration is still poor," said Chandra Shekhar Ghosh, founder chairman and managing director of Bandhan Bank.
Bangladesh-born Ghosh obtained his post-graduate deg-ree in statistics from Dhaka University in 1984. Later he joined Brac. He went to Kolkata in 1997 and got involved with family business.
In November 2001, he founded Bandhan as a non-governmental organisation with a capital of Rs 2 lakh. It received the banking licence from the RBI in 2014.
Bandhan had 67 lakh micro-finance borrowers and their accounts have been formally transferred to the new entity, creating around Rs 10,000-crore strong loan portfolio to start with.
Bandhan began operation with 500 branches, a majority of these are in the eastern region including West Bengal.
Ashok Kumar Lahiri, former chief economic adviser to the finance ministry, will head a 10-member board, which consists of as many as four former top bank executives such as Bhaskar Sen of United Bank of India and B Sambamurthy of Corporation Bank.
Multilateral financier Interna-tional Finance Corporation and the Singapore government-backed GIC are expected to invest Rs 500 crore collectively in Bandhan Bank soon, taking the networth to Rs 3,200 crore.
Kotak Mahindra Bank and YES Bank were the last to get private bank licences in February 2003.
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