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Repayment rates for all our loan portfolios very healthy: Chandra Shekhar Ghosh, Bandhan Bank

I have not seen any impact of the slowdown at our rural centres

ET Now|
Last Updated: Jan 15, 2020, 10.21 AM IST
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The second factor is our reach in rural areas, which at 70 per cent in comparison with other private banks which have average deployments of 27 per cent, is quite high.
In an interview with ET, Chandra Shekhar Ghosh, managing director and CEO of Bandhan Bank, discusses the Kolkata-based MFI-turnedbank’s profit growth in Q3, impact on business due to NRC protests in Assam and outlook on the Indian economy. Excerpts:

ET: What are the reasons for profit growth?
Chandra Shekhar Ghosh: Two factors: One is that we have controlled the non-performing assets. The repayment rates for all our loan portfolios have been very healthy which contributes directly to our interest income.

The second factor is our reach in rural areas, which at 70 per cent in comparison with other private banks which have average deployments of 27 per cent, is quite high. Most of our business is in areas where costs are minimal, which is an advantage for us.

ET: Economic growth outlook?
Chandra Shekhar Ghosh: In my visits to most of our rural centres, I’ve not seen any impact of the slowdown. There are talks at the top level, but at ground level, it is totally different. We were a bit conservative in growing our books in the first three quarters. My standalone loan growth at 33 per cent is because we’ve been conservative due to people talking. I feel the next quarter the growth will normalize because the last quarters are generally strong.

ET: Additional provisions due to political uncertainties?
Chandra Shekhar Ghosh: We have taken a small portion of our reserves (₹200 crore) for these provisions as there have been talks of political unrest even though I have not seen it. We will decide in the next quarter based on how things turn out.

ET: Impact of protests in Assam on banking activities?
Chandra Shekhar Ghosh: See, my normal repayment rates are above 98 per cent on microfinance loans while in Assam it is over 99 per cent. Three weeks ago, the repayment rates dipped to 78 per cent in Assam because people couldn’t reach banks due to roadblocks and curfews. Within two weeks, it came back to above 93 per cent.

About 16 per cent of our microfinance loan book is in Assam. In some corners, there has been some political turmoil. We have made the provisions and we’ll see what happens.

ET: Housing loan slowdown?
Chandra Shekhar Ghosh: At ground level, some slowdown is seen, especially in urban periphery zones. However, the penetration of housing loans is still low. We see opportunities in this segment.

ET: About MSME segment?
Chandra Shekhar Ghosh: It is a good market. However, there needs to be proper documentation by these businesses for banks to gauge repayment abilities and offer credit. Once awareness of these important aspects of documentation is spread, it’ll turn into a good opportunity.

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