Bandhan Bank to increase its exposure to guaranteed loans to MSMEs: MD & CEO

Private lender Bandhan Bank will gradually increase its exposure to secured loans by improving advances to the housing and MSME sectors, its managing director and CEO Chandra Shekhar Ghosh said.

Currently, the bank’s exposure to MFI loans, which are unsecured, is 47%, and the share of its advances in the housing segment is 24%, retail 2% and the sector micro, small and medium enterprises by 27%. percent, he said.

Ghosh told PTI that “the lender will increase its exposure to secured loans and has set a target to increase disbursements for housing and medium-sized MSME loans. Advances to MFIs and small MSME loans will not are not guaranteed”.

It said 25% of its loans to MFIs will be converted into formal advances to MSMEs, as the segment’s interest rates are similar to microcredit or self-help group (SHG) loans.

There will be “no impact on the profitability” of the bank as there is no difference in interest rates, he said.

In the last quarter of the previous financial year, the bank recorded a net profit of Rs 1,902 crore and there was no provisioning for bad debts, he said.

By 2025, the bank will reduce “group loan advances, which are microloans given to a group of small borrowers to 26% of the advance book.”

Responding to a question about branch expansion in the current fiscal year, Ghosh said about 530 bank outlets will be opened across the country, bringing the total number to more than 6,000.

Recently, the holding company of private lender Bandhan Financial Holdings Ltd diluted 21% of its stake in the banking entity to raise Rs 10,600 crore, of which Rs 4,500 crore had been used to acquire a majority stake in IDFC Mutual Fund.

Currently, the holding company’s shareholding has fallen to 40%, which is “in line” with regulatory standards, Ghosh said.

Previously, Bandhan Financial Holdings’ stake was 82% at the time of the bank’s IPO, then fell to 61% with the acquisition of Gruh Finance.

Ghosh said there was no need for a follow-up public offering because the bank is sufficiently capitalized.

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