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Synopsis: Bandhan Bank embarks on its "Bandhan 2.0" transformation plan, aiming for a balanced loan portfolio and enhanced growth under a new management team composed of banking veterans from Axis, HDFC Bank, and Citi. With founder Chandra Shekhar Ghosh retiring, the bank focuses on technological upgrades, diversified offerings, and robust risk management to achieve its ambitious goals.
With the impending retirement of its founder Chandra Shekhar Ghosh on July 9, Bandhan Bank is poised to launch an ambitious transformation strategy dubbed "Bandhan 2.0." This plan is set to reshape the bank’s operations and growth trajectory over the next three years under the leadership of a new management team comprising experienced professionals from Axis Bank, HDFC Bank, and Citi.
Currently, Bandhan Bank's loan portfolio consists of 57.4% unsecured loans and 42.6% secured loans. The bank aims to achieve an equal balance of 50:50 by FY26. CFO Rajeev Mantri, who has extensive experience in banking and finance, notably as the CFO for Citi India, highlights that the bank will maintain an overall growth rate of 18%. To reach this target, Bandhan's traditional microfinance segment is expected to grow at a slightly slower rate of 14-15%, while other secured loan segments such as housing, auto, and gold loans will need to accelerate their growth.
The bank's diversification efforts have expanded its loan book to include commercial banking for SMEs, corporate banking, housing finance, and various vehicle loans. Additionally, Bandhan is introducing products targeting affluent customers, such as priority cards and lounge access, as well as enhancing its corporate vertical with transactional banking services aimed at generating fee income.
A significant aspect of Bandhan 2.0 is the overhaul of its credit underwriting processes. The introduction of a 90-day cooling-off period for accounts becoming NPAs, the establishment of a data analytics team with graduates from IIMs and IITs, and the creation of a dedicated recovery team for special mention accounts (SMAs) are key measures to optimize risk management and prevent loan delinquencies.
Rajinder Kumar Babbar, Executive Director & Chief Business Officer, emphasizes the bank's strategy of leveraging data science and analytics to drive growth-oriented decisions. Babbar, who brings over three decades of banking experience including 23 years at HDFC Bank, is tasked with enhancing business opportunities, fostering innovation, and managing risk while ensuring regulatory compliance and operational efficiency.
The transformation journey was accelerated with the hiring of Ratan Kumar Kesh in March 2023 as Executive Director & Chief Operating Officer. Kesh, with nearly three decades of experience in major banks like ICICI Bank and Yes Bank, was brought on board to expedite the transformation. One of the significant changes implemented under his leadership was the upgrade of the core banking solution (CBS) from FIS to Oracle, addressing nearly 90% of the regulatory issues and aligning the bank with the dynamic requirements of the RBI.
In conclusion, Bandhan Bank's "Bandhan 2.0" initiative is set to drive substantial growth and transformation. With a strategic focus on a balanced loan portfolio, technological advancements, and robust risk management, the bank is well-positioned for sustained success beyond the tenure of its founder.
