Bandhan Bank to raise share of secured loans to 70% by March 2025 to reduce credit risk

Private sector lender Bandhan Bank, a leader in unsecured micro lending, is planning to raise the share of its secured loans to about 70% by March 2025 to reduce credit risk in its portfolio.

Secured loans account for 39% of its portfolio of Rs 99374 crore. The share of microfinance, which is unsecured in nature, was 44% of its book at the end of June.

Bandhan Bank founder-cum-managing director Chandra Shekhar Ghosh said that the growth in secured loan books are being driven by the rise in housing loans and MSME loans.

“The bank will diversify the asset base and exposure to secured loans will grow to 70 per cent by 2025,” he said Thursday.

The process of business diversification at Bandhan Bank started when the Kolkata-based lender acquired housing finance company Gruh Finance. At that time, microfinance had contributed 86% of its loan portfolio. At the end of June 2023, microfinance accounted for 44% with housing loans contributing 26%.

As per its diversification strategy, the share of microfinance would reduce to 26% by FY25. Microfinance or micro loans are typically unsecured as lenders offer them without collaterals or securities.

The bank is also looking to geographical diversification with more focus on physical expansion to north, west and southern markets. At present, nearly half of its 5640 branches are in the eastern and northeastern regions.

On Thursday, Ghosh was talking to the media after introducing former India cricket captain Sourav Ganguly as its brand ambassador.

“He (Ganguly) is a global icon and commands respect from all quarters. We are confident that this partnership will help us garner more attention, leading to greater awareness of the brand, and thus propelling us further in our growth story,” Ghosh said.

The announcement however came when Dada, as fondly called by the nation, is on his way out — rather unceremoniously — as president of the Board of Control for Cricket in India. Ganguly became president of BCCI in 2019 and his stint is coming to an end soon. Media reports suggest that he faced severe criticism for his “underperformance” and some controversial decisions taken as BCCI president.
“I will move on to something else,” Ganguly said at the event without giving specifics. “You can’t be a player forever, you can’t be an administrator forever,” he said.
Source: Economic Times

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