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Title:Bandhan first MFI to turn into universal bank

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KOLKATA: The country's youngest lender Bandhan Bank kicked off operations on Sunday with a loan book of Rs 10,500 crore, 501 branches and 1.43 crore account holders. The bank has started business with a paid-up capital of Rs 2,750 crore, against the minimum prescription of Rs 500 crore, and plans to raise an additional Rs 480 crore by issuing shares to the International Finance Corporation (IFC) and the Government of Singapore Investment Corporation (GIC).

Bandhan, which started as an NGO in 2001 and later turned into a microfinance institute, is the first MFI to become a universal bank. Its operations will be divided into two sectors: micro-banking and general banking, offering complete retail financial solutions with different types of savings and loan products. The interest rate for the savings bank account has been fixed at 4.25 per cent for a balance up to Rs 1 lakh and 5 per cent for balance above Rs 1 lakh. For term deposits, the maximum interest rate has been fixed at 8.5 per cent for one to three years, with an additional 0.5 per cent for senior citizens.

Chandra Shekhar Ghosh, founder-MD and CEO, Bandhan Bank, said, "Our business philosophy is 'customer first'. We are a universal bank and we will have equal respect for all our customers - big and small. Bandhan has opened 60,000 accounts after it started its operations. In the first day of its banking operations, Bandhan received about Rs 80 crore deposits."

Bandhan is the first private lender launched in Bengal in six decades since bank nationalization, started offering zero-balance savings accounts from day one. Praising Bandhan's financial inclusion initiative, finance minister Finance minister Arun Jaitley, who inaugurated the bank in Kolkata on Sunday, said Bengalis are known for intellectual qualities but Ghosh has proved that they can be good entrepreneurs as well. "I hope this will lay the foundation stone for Bengali entrepreneurship."

Among others present at the launch were West Bengal finance minister Amit Mitra, Kotak Mahindra Bank vice-chairman and MD Uday Kotak, World Bank country director (India) Onno Ruhl, GIC, Singapore MD and Asia head Maverick Wong, IFC South Asia director Alemayehu Mengistu and Bangladesh central bank governor Atiur Rehman, among others.

Jaitley also advised people to stay away from unscrupulous financial institutions. "With banks like Bandhan around, people should now save money with banks," he said, appreciating Bandhan's focus on small and medium industry financing.

Bandhan, which has 2,022 service centres, plans to expand its network from 50 ATMs to 250 and raise its branch count to 632 branches in 27 states by the end of 2015-16. The bank's base rate for the time being would be 12 per cent. The high base rate is owing to its dependence on bank funds so far.

The bank currently has 71 per cent branches in rural India, of which 35 per cent are in unbanked rural pockets. The bank, which is based out of Bengal, has 220 branches in the state, followed by Bihar (67), Assam (60), Maharashtra (21), Uttar Pradesh (20) and Tripura (20), and Jharkhand (15).

Ghosh said Bandhan, which received RBI's final nod to commence its banking operations in June this year, would initially stay away from corporate lending and only concentrate on rural unbanked areas and offer regular banking services to low and middle income households, especially in the eastern India.

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