Bandhan Financial Services Pvt Ltd, a microfinance institution, is expected to start full-fledged banking operations within one year. The first branch will be opened at its corporate headquarters in Kolkata.

The Reserve Bank of India (RBI) on Wednesday granted preliminary banking licences to Bandhan and IDFC.

“We will soon finalise a plan to execute the project. The first branch will be opened in Kolkata,” Chandra Shekhar Ghosh, Chairman and Managing Director, Bandhan, told Business Line .

Incorporated as a non-governmental organisation in 2001, Bandhan is the largest micro-finance institution (MFI) in the country with 22 per cent market share.

“I had no previous experience in the banking sector. We are thankful to our stakeholders and the RBI for having faith on us,” he said.

International Finance Corporation (IFC) and Small Industries Development Bank of India (SIDBI) have equity stake in the company.

The MFI has 55 lakh borrowers. Its net worth is estimated at ₹1,100 crore.

“As on date our disbursals stand at ₹9,100 crore, and collections are to the tune of ₹7,000 crore,” Ghosh said.

The company has 2,016 branches across 18 States — including the eastern States of Bihar, Jharkhand and West Bengal — and an employee strength of 13,000. Nearly two-thirds of its branches are in rural areas. Asked how a banking licence would benefit Bandhan’s business plans, Ghosh said banking licence would help the company address all four dimensions of financial inclusion, namely, savings, credit, insurance and remittance.

“Currently, we are catering only to the credit side. A banking licence will help us address the other three areas,” he added.

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