The Bandhan: An Indian bank modelled after Brac
"Bandhan" is a familiar name in India. With over 5,600 banking outlets and a 2.77 crore customer base, Bandhan Bank is one of India's largest and fast-growing banks. Within a span of seven years, since its inception in 2015, it has expanded to 34 out of 36 states and union territories, except Lakshadweep and Ladakh.
A public limited company with a $12 billion asset base, it employs 64,000 staff. With its headquarters in Kolkata, Bandhan is the only bank set up in eastern India since India's independence in 1947.
A distinguishing feature of Bandhan Bank is its clients, about half of whom are economically marginalised. Indeed, the Bank's origin was in a microfinance institution (MFI) that was set up in 2001.
As it grew to become the largest MFI in India, its founder Chandra Shekhar Ghosh applied for a universal banking licence. Securing such a licence is rare and a big news in the Indian context. India now has only 34 such banks, 12 publicly-managed and 22 in the private sector. Compare this to Bangladesh. With a population and economy about one eighth of India's, Bangladesh has 49 commercial banks, plus 10 Shariah-based Islamic banks.
However, beating some of the well-known and influential contenders and to the surprise of many, Bandhan got the universal banking licence from the Reserve Bank of India. Bandhan is the first ever Indian MFI to have become a universal bank. Afterwards, there was no looking back. It has been maintaining an average 50% annual growth in its financial parameters and customers since inception.
Unlike Bangladesh where microfinance had a relatively easy sail, the industry faced many upheavals in India. Despite the Andhra Pradesh crisis in 2010 which uprooted most MFIs because of a government intervention, Bandhan continued its activities unabated in West Bengal and other states. Ghosh played a most impressive leadership role in this crisis and helped rescue the industry. Bandhan's microfinance operation is by far the largest in India.
After transforming it into a universal bank, Ghosh remained true to his original goal – poverty alleviation and financial inclusion. Its development arm, called Bandhan Konnagar, is by all measures an NGO. I had the opportunity to work with Ghosh, or Shekhar as we fondly called him, when he worked for some years in Brac's microfinance and training programmes before moving to India. As he still recounts, his inspiration, practical training and ambition resulted from his days in Brac. This is a splendid example of taking the spirit of Brac beyond its known geographical presence.
Last month, Shekhar hosted a group of his former Brac colleagues and their spouses on a trip which took us to Kolkata, Shantiniketan, Darjeeling and Jalpaiguri. With the impeccable hospitality of Shekhar and his lovely wife Nilima, it was a pleasure trip which everyone in the group of twenty enjoyed to the brim. Shekhar took out time from his busy schedule to be with us. Additionally, we were also able to get a picture of what Bandhan, particularly Bandhan Konnagar, does.
The Bank part is too well known, but we were amazed to know of the other part. Bandhan Konnagar runs many development programmes, just like Brac does, reaching nearly 40 lakh families in 13 states. Its 'Targeting the Hard-core Poor Programme' has reached nearly 200,000 ultra-poor families with a package of interventions.
With 26 physical training facilities in Bihar, Madhya Pradesh, Assam, Odisha and West Bengal, their 'Employing the Unemployed Programme' has trained over 45,000 youths in skills such as hospitality, business process outsourcing, beauty and wellness, computer hardware and networking, and food production.
Its health programme trains village-based Swasthya Sahayika to provide primary care and health education. The education programme organises a diverse age group of underprivileged children for non-formal primary education in single teacher schools. Another impressive initiative is the Bandhan Academy, which runs 10 formal secondary schools to provide quality education in semi-rural locations.
We also had the opportunity to visit two of its 11 training centres. Each has a residential capacity of about 300 and excellent services. They can be compared with any modern state-of-the-art facility. We also visited Nakshi, a tastefully decorated craft shop chain, run by Shekhar's wife Nilima. Formally inaugurated by Actor Aparna Sen, this market linkage initiative which supports rural artisans is similar to Brac's Aarong.
Bandhan Konnagar is now moving to establish a modern hospital, a medical college and a university. There is no doubt that such new endeavours will take the organisation to new heights and excellence in meeting its objectives of poverty alleviation and women's empowerment.
Chandra Shekhar Ghosh has not forgotten his past. He remains deeply rooted. He is exceedingly proud of his village sweetshop-owner father and his alma mater, the Dhaka University Statistics Department. He is very proud of his earlier life with Brac. At 62, my friend and former colleague Shekhar is a celebrated legend.
He is a star both in India and abroad. A visit to his office in Kolkata's Salt Lake City revealed the numerous accolades and honours that he has received from around the world, which include the 'Leadership Excellence Award' given to him by the Dhaka University Statistics Department Alumni Association (DUSDAA). He is a subject of many popular books and articles. His soft, simple, down-to-earth, and modest manners make him a unique leader. Keep going, Shekhar!
Mushtaque Chowdhury, PhD was until recently the Vice Chair of Brac and is currently a Professor of Public Health at Columbia University in New York.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
