Bandhan 2.0: How the bank plans to transform without founder Chandra Shekhar Ghosh at the helm

With Chandra Shekhar Ghosh set to retire on July 9, the private sector Bandhan Bank is ready with a plan for the next three years. Currently, the bank’s portfolio is 57.4 per cent unsecured loans and 42.6 per cent secured loans. The plan is to achieve a 50:50 ratio by FY26. 

The bank’s CFO Rajeev Mantri explains that the bank will continue to grow at 18 per cent. Mantri has over 25 years of experience in banking and finance across India, Singapore, and the UAE. In his most recent role, he was the CFO for Citi India, which recently sold its consumer banking business to Axis Bank. 

The bank's traditional microfinance segment will grow at a slightly lower rate of 14-15 per cent,  which means that the other secured segments (housing, two-wheeler, auto, commercial vehicle, and gold loans) will need to grow faster to achieve the overall growth target. 

The bank has diversified its book to include commercial banking (SME), corporate banking, housing finance including higher-yielding affordable housing, commercial vehicle loans, car loans, two-wheeler loans, four-wheeler loans, gold loans, etc. It aims to offer products for the affluent like priority cards and lounge access, besides salary accounts. In the corporate vertical, it is targeting transactional banking for fee income.

It has also overhauled its credit underwriting processes. For instance, it has introduced the concept of a cooling-off period. If a customer’s account becomes NPA, there is a system-enforced 90-day cooling-off period before issuing a fresh loan. The bank has also set up a data analytics team, hiring dozens of graduates from IIMs and IITs. It has also created a separate recovery team to focus on SMA (special mention account, that shows signs of stress) borrowers to prevent them from slipping into further delinquency and to recover any existing slippages. The bank has a comprehensive strategy to optimise risk management with customer-centric growth. 

“This approach leverages data science, analytics, and a deep understanding of customer behaviour to drive growth-oriented decision-making,” says Rajinder Kumar Babbar, Executive Director & Chief Business Office. Babbar has over three decades of banking experience, including a 23-year tenure at HDFC Bank.

In March 2023, Ghosh hired Ratan Kumar Kesh, also the bank’s Executive Director & Chief Operating Officer, to speed up the transformation exercise. Kesh brings nearly three decades of banking experience, having worked in large banks such as ICICI Bank, HDFC Bank, Yes Bank, and Axis Bank. The bank has shifted its core banking solution (CBS) from FIS to Oracle, as the FIS system made it challenging to incorporate regulatory changes and fast-changing customer requirements, creating friction with RBI.

By completing the transformation in October, Bandhan has addressed almost 90 per cent of the pending regulatory issues. This March, Ghosh picked Babbar, also the bank’s Chief Business Officer, with a mandate to drive Bandhan towards sustained growth and success while maintaining a strong focus on customer satisfaction, regulatory compliance, and operational efficiency. “Some of my key responsibilities are enhancing business opportunities, bringing in innovation and digital transformation, driving revenue growth and managing risk at the same time,” says Babbar.