................"We plan to start off with 600-700 branches across the country. Some of them may be either existing ones or new," Bandhan Financial CMD Chandra Sekhar Ghosh said. He said that 80 per cent of the branches would be in the rural areas and the rest in the urban regions..............
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2 comments:
Kudos to Bandhan for taking steps to move forward with about 600 rural bank branches. A few but significant challenges for Bandhan MFI becoming Bandhan Bank would be:
Now providing microfinance is the main and only business of Bandhan MFI. But, providing microfinance will become one of the overall business segments of Bandhan Bank to comply with the Priority Sector Lending commitments of the RBI. So, more of those unbanked and underbanked may be forced to go back to informal sector particularly money lenders and big land lords. Financial Inclusion may also be only a show case activity instead of it being its main activity being carried on on a Mission mode.
The staff of Bandhan MFI are paid relatively less than those offered for holding similar positions in banks. Once Bandhan Bank starts operating, the existing staff of MFI who would be transferred to Bandhan Bank would have to be paid higher salaries commensurate with that of their counter parts in the banking industry. We have the example of RRBs before us as it started with low cost banking but ended up paying salaries equivalent to the PS Banks and huge capital infusion year after year has become the norm. Bandhan Bank may also face similar situation in future.
What could have been done by the RBI is that it would have issued a preferential licence to enable Bandhan MFI to function on the lines of Bancosol of Bolivia or Grameen Bank of Bangladesh so that it may not lose its character as a leading MFI in the country. Now it is like an arrow that has gone out of the bow and RBI will have little control on the formation of Bandhan Bank which would lose its MFI character if not in the short run, but certainly in the long run.
Under the present dispensation differential licensing is not permitted. RBI is mulling the idea of such license in future.
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