Bandhan targets rural transport segment to start retail lending operations

New genrartion lender Bandhan Bank is looking to tap offbeat segments to expand its retail lending operations. To begin with, Bandhan will be financing smaller vehicles in rural and semi-urban areas, as well as suburbs surrounding cities.

Bandhan plans to initiate its first loan campaign on financing the rural transport segment – to provide finance to rickshaw-pullers who want to buy mechanised or battery-powered rickshaws, Chandra Shekhar Ghosh, founder, MD and CEO of the bank, said.

The Kolkata-based bank is looking to start retail lending operations with loans in the range of Rs80,000 to Rs1,00,000, targeting primarily rickshaw-pullers and operators of 'Vano' – cycle vans powered with discarded motorcycle engines, used for ferrying people and goods.

Similarly, 'totos', a battery operated three-wheeler vehicle, which is popular in neighbouring districts of Kolkata as a mode of public transport, are priced upwards of Rs1,00,000.

''We intend to start financing rickshaw pullers and other operators in the rural and semi-urban areas, so that they can upgrade to smaller or battery-operated vehicle,'' The Hindu Business Line quoted Ghosh as saying.

To begin with, Bandhan will be providing loans to around 1,000 people, on a pilot basis, in the first phase to starting 1 January, Ghosh said. He did not specify the areas where he was targeting to introduce the scheme.

Lending will in the first phase be done by the micro-finance arm of the bank, he said, adding that the micro-finance business is expected to grow 30 per cent to Rs13,000 crore by the end of this fiscal), against Rs10,000 crore last year.

Bandhan is also looking at lending options to the ''affordable housing segment,'' Ghosh said, citing the need for small loans in the Rs5-15 lakh range. He said most banks lend in the range for properties valued at nearly Rs40-50 lakh.

There remains a huge gap at the bottom of the pyramid, which banks have left out, he said, adding that Bandhan will cater to this segment.

''We have started going for such small value retail loans targeting the affordable housing segment. But this is on a pilot basis. The numbers of disbursals are very nominal at present,'' he said.

Bandhan, with a current base of 591 bank branches across 27 states, is looking at fresh capital infusion of Rs428 crore from the International Finance Corporation and the Singapore government-backed GIC by March 2016.

The two have already invested Rs 1,020 crore in the bank and have committed an equity investment of Rs1,600 crore. After the investments, the bank might have representatives of the two organisations in its board also, said Ghosh.

Bandhan has a current capital base of Rs2,570 crore, against the regulatory requirement of Rs500 crore. Fresh capital infusion will bolster this to Rs3,052 crore, raising the bank's credit risk-weighted asset ratio to 44.54 per cent, one of the highest in the sector.