Bandhan Bank will not do distress sale to pare promoter stake: Chandra Shekhar Ghosh

Bandhan Bank’s managing director Chandra Shekhar Ghosh has kept a low profile since the Reserve Bank of India restricted branch expansion and froze his remuneration at the current level for failing to bring down promoters’ stake to 40% from 82%. In an interview to Atmadip Ray, he spoke on the bank’s performance and future roadmap.

Edited excerpts:

Your stakeholders, especially customers, have been extremely apprehensive after the RBI came down heavily on the bank on the issue of promoters’ stake. The bank has shown good financial numbers for the second quarter. What is in store in the next two quarters?

We have been telling everybody that it’s business as usual for us and the regulatory issue has nothing to do with business growth. We already have 938 branches which are operating below optimal level. So, there’s immense opportunity to grow.


Would you be able to maintain that pace of year-on-year growth in advances and deposits?

Our advances grew 51% while deposits grew 30% in the second quarter. Our previous experience shows that the last two quarters are always better in terms of business. So, we are optimistic. I can’t put any number because there are numerous challenges in the current market conditions. Our core microfinance business has remained stable and has been growing steadily.

Do you anticipate new stress on asset quality due to the current market situation? How exposed are you to non-bank lenders?

About 87% of our business comes from microfinance while recovery has improved from demonetisation days. We always do our business by assessing the cash flows of borrowers and that gives the best results. Our aim is to bring down gross non-performing loan ratio to below 1% by March 2019 from 1.3% now. Merely 13% of our loan book of ₹33,373 crore is from other business which includes exposure to NBFCs including IL&FS where our exposure is 1.2%.

Your net interest margin remained flat at 10.3% for the second quarter compared to the preceding quarter. You have raised deposit rates recently. Will there be any rise in lending rate?

I can’t comment on that. Our ALCO (asset liability committee) takes a call according to market conditions. Normally, we don’t raise lending rates if the cost moves within a close band. As thing stands now, I don’t see the need to raise lending rates. But I would like to reiterate that it’s ALCO’s call.

How do you plan to bring down the promoter’s stake in the bank?

There can be three ways. First, the holding company can sell its stake in primary market and use those funds to foray into other businesses like insurance or mutual fund. Second, promoters can sell their share in the secondary market. Third, by way of mergers and acquisitions.

How fast can this happen?

As soon as possible. However, I would like to assure everyone that there would be no distress sale. We will not do anything that dilutes shareholder value.

We understand you have spoken to the regulator on this issue to clarify your stand…

I don’t want to comment further. This will be inappropriate on my part.