Will Bandhan Bank move to the next level?
Bandhan Bank has transitioned well from a micro-finance institution to a bank after commencing banking operations in August 2015. Brokerage firm Religare has come up with some interesting insights on this unlisted Kolkata-based bank based on its annual report. 
 
Up to March 2016, it had garnered Rs121 billion of deposits. Out of these, current and savings account (CASA) deposits stand at Rs26 billion. Banks accounted for around 35% of its total deposits. Bandhan Bank has a stellar savings account (SA) deposit ratio of 20%. It has issued 77 lakh debit cards up to now. 
 
On the flip side, there is a concentration risk with respect to deposits as the top 20 depositors constituted 30% of the total deposits. Another problem for the bank is that the savings account balance per account is low. After doing some number-crunching, Religare estimates that the average balance per savings account for the bank is at a little more than Rs3,000. This low ratio impacts profitability as the operating costs of these accounts is high in comparison to the income generated.
 
Coming to the loan book, agriculture and allied loans constitute more than half of its total loans. Currently, its small and medium enterprises (SME) loans stand at Rs65 crore. These constitute merely 0.5% of the total loans. It intends to focus on SME loans with a ticket size of Rs1 lakh– Rs10 lakh and retail loans. Its retail loans stand at Rs60 crore i.e. 0.5% of the total loans. 
 
Its return on equity (RoE) stands at a around 17% on an annualised basis, while its return on assets (RoA) is at 3.8%. Currently, around 1/3rd of its total branches are situated in urban regions. Its future plans include opening of 180 new branches by March 2017. The majority of its new branches will be opened outside West Bengal. The management plans to brand the bank as a pan-India bank. The bank is experimenting with low-cost small format branches in parts of West Bengal and Bihar in order to reduce operational costs. These branches will have minimal staff and will largely restrict themselves to deposit-taking and withdrawal of money. 
 
Bandhan Bank, which was set up as a micro-finance company in 2001, received a banking license from the Reserve Bank of India (RBI) in 2014. Some of the investors in the Bandhan Bank include World Bank Group's International Finance Corporation (IFC) and Small Industries Development Bank of India (SIDBI). 
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    COMMENTS

    Ramesh Jaradhara

    4 years ago

    I view the Bandhan Bank as one of the promising banks in India because the business model it is adopting is low cost and within a couple of years the bank will grow in a large scale. Being evolve from a micro-finance level it has a strong customer base at the grass-root level and slowly the market segment will grow into other sectors. Judging a bank on the performance over one year is not sufficient. I see a bright future for Bandhan Bank.

    Facing losses, 'Freedom 251' maker seeks government help before launch
    As consumers wait to see the cheapest smartphone (less than $4) at its scheduled launch in the capital on Thursday, its Noida-based makers have made another pitch for the government's support to make their loss-making venture "work for millions" who don't own such a phone.
     
    According to Ringing Bells Pvt Ltd CEO Mohit Goel, he initially faced Rs 930 loss on each handset that cost him Rs 1180 and for which parts were imported from Taiwan.
     
    "I recovered Rs 700-800 from app developers and revenue generated through advertisements on Freedom 251 website. After selling the device for Rs 251 (cash on delivery), the total loss per handset is expected to be in the range of Rs 180-270," Goel told IANS. 
     
    The first batch of 5,000 'Freedom 251' devices will finally be out for delivery from July 8 and the receiver will have to pay Rs 291 (including Rs 40 as delivery charge) to get the unit, says Goel.
     
    "In order to digitally-empower every Indian, if I can get government support under the Digital India programme, I can ensure timely delivery of 'Freedom 251' phone to all citizens at the same price," Goel said on the eve of the launch event.
     
    In a letter written to the Prime Minister's Office dated June 28 asking for a meeting with Narendra Modi, Ringing Bells said: "We have brought 'Freedom 251' which we offer on 'Cash on Delivery' terms but we have a gap between the BOM (Bill of Materials) and the Selling Price. We, therefore, humble request government support to actualise the objective to cascade the availability and usage of smartphones all through the far reaches of our great nation".
     
    Goel's ambition is huge. He says if the government is willing to dole out Rs 50,000 crore, he can ensure that 750 million of India's population would become part of digital India by owning a smartphone at Rs 251.
     
    Bringing some modesty into the equation about the enormity of his demand, Goel says that the government need not give his company the money but can get it manufactured by another vendor.
     
    "The government can make the phone -- under our Freedom brand -- from some other vendor. I have no objection to it. To make such phone for every Indian citizen, the government needs to allocate funds from its Digital India initiative," he said.
     
    Having learnt his lessens from the controversial February launch when Ringing Bells invited senior BJP leader Murli Manohar Joshi, this time, Goel wants to play safe and is not inviting any politician for the launch.
     
    "I want to keep this event controversy-free. I have proved that a smartphone is actually possible in this kind of investment. But to fulfil a mammoth handset order that runs in crores, we badly need government's support," he added.
     
    To generate more revenue, he plans to go to iCloud (cloud storage and cloud computing service from Apple) and begin a software called "WhiteCloud".
     
    "The aim is to make and provide at least 100 new apps online to 'Freedom 251' owners and charge them bare minimum -- to the tune of Rs 1 to Rs 3 per app -- to generate revenue," he said.
     
    After delivering 5,000 phones in the first batch, Goel says he will wait for customers' feedback. "I am ready with 500 service centres pan-India to address people's queries," he claimed.
     
    The company will also showcase a 32-inch high-definition LED television -- also called "Freedom" -- at the launch event.
     
    "These will be the cheapest television sets in India and will be available for less than Rs 10,000. Online registration for the TV sets will be open from July 25 with delivery to be made from August 1," Goel said, claiming that the company currently has one lakh such pieces in stock.
     
    In comparison, the price of a 32-inch HD LED TV sets normally begins from Rs 13,000 in online markets.
     
    In an earlier interview to IANS, Goel had also claimed that they are ready with nearly two lakh 'Freedom 251' handsets. 
     
    The company had in mid-February this year planned to deliver 25 lakh handsets before June 30. However, it received over seven crore registrations before its payment gateway crashed within three days. 
     
    The 3G device has a 1.3GHz quad-core processor, 1GB of RAM and 8GB of internal memory and supports external memory cards of up to 32GB. 
     
    The company has offered an 8MP primary camera with flash, a 3.2MP front camera and a 1,800 mAh battery. It runs on Android 5.1 (Lollipop). 
     
    The phone would be available in two colours -- black and white. 
     
    The device displays the Indian Tricolour when you switch it on. It will incorporate all the basic Google apps in the handset, according to Goel. 
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    TRAI to set service quality norms for mobile data
    Telecom regulator TRAI has said it will soon float a consultation paper to decide on the service quality norms for mobile data.
     
    TRAI Chairman R.S. Sharma said a consultation paper to fix quality of service benchmark for wireless data will be issued soon, which will be put on the TRAI Analytics Portal.
     
    Sharma was speaking at the launch of 'TRAI Myspeed App' to measure the real time speed of mobile internet.
     
    The consultation paper will discuss the average criteria of data speed that can be assured, Sharma said.
     
    Separately on Tuesday, TRAI also issued a draft regulation seeking to extend the validity of special data packs to 365 days from the current 90 days.
     
    “After examination of various aspects of the issue, the Authority feels a longer validity of 365 days instead of the current 90 days could be beneficial for marginal consumers, first-time users and price-sensitive consumers,” TRAI said in a statement.
     
    The draft has been put in public domain on which comments are sought till July 26.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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