General Knowledge and Current Affairs are an important component of many competitive exams, such as the UPSC Civil Services Examination, SSC CGL Exam, Bank PO & other PSU entrance tests, etc. Therefore, understanding the concepts/terms/events that are significant in our daily lives is critical for aspirants. To make your preparation easier and to help you score better in your exams, we at PaGaLGuY bring you brief articles on important phenomena, concepts and events. Spend just 15 minutes every day on pagalguy.com and score at least 10 more marks in your General Studies paper!
To access all the content available on PaGaLGuY, login to https://www.pagalguy.com/
In this article, we would learn about the newly inaugurated Bandhan Bank
Bandhan Bank, which officially opened doors on August 23, became the first private bank to be inaugurated in India after a period of 11 years. What started in 2001 as Bandhan Financial Services Ltd. (BFSL) later came to be known as India’s largest microfinance company for its efforts to make credit available to the underprivileged and the unbanked. In April 2014, the RBI granted universal banking licence to BFSL to channelise the latter’s financial inclusion efforts.
Highlights
1. The bank has commenced operations with a capital base of Rs.2570, which is much higher than the Rs.500 crore prescribed by the RBI for new banks and hence a better start for Bandhan.
2. The bank will get an additional Rs.482 crore from the multilateral International Finance Corporation and from the Singapore government-backed GIC. This will strengthen its capital base to Rs.3,052 crore.
3. As accounts of 67 lakh microfinance borrowers were transferred to the new entity Bandhan’s loan book stands at Rs.10500.
4. Out of its 1.43 crore depositors, close to 60,000 were new. The deposit base stood Rs.80 crore a few hours after the bank’s inauguration.
5. Of its 501 branches across 24 states, West Bengal has the maximum number at 220 branches. A total of 229 branches are in rural areas and 179 in unbanked areas. By the end of FY16, Bandhan aims to have 632 branches across 27 states. The current employee strength stands at 19,500.
6. As cost of funds comprising loans taken from others banks is 12.5%, Bandhan has set its base rate at 12%.
7. To compensate for the high lending rate, Bandhan has set competitive deposit rates. While savings bank rate is 4.25% for deposits below Rs.1 lakh and 5% for deposits above Rs.1 lakh. For term deposits, the maximum rate, between 3-5 years of maturity, has been set at 8.5%, with an additional 0.5% for senior citizens.
Bandhan Bank’s future plans
Chandra Shekhar Ghosh, founder of BFSL and MD and CEO of Bandhan Bank stated during the inauguration that while the bank will cater to all sections of the society, its major focus will be small and marginal farmers, SMEs and the unbanked. This experience in catering to low-income customers, opines Ghosh, will enable the bank to outperform the new set of payments and small finance banks. Keeping in with its goals, Ghosh confirmed that Bandhan’s corporate banking is on hold.Presently, cost of funds is high and thus the bank will aim at aggressive deposit mobilisation over the next one year, going slow in lending.
While Ghosh’s understanding of the small borrowers’ segment
is profound and varied, financial experts opine that tough competition from
existing public and private players cannot be discounted. This would prove all
the more difficult as unlike other universal banks that have diverse operations,
Bandhan’s main focus would be on a particular segment.
A great capital base, strong investor backing has given the
bank an impressive start. However, it remains to be seen whether Bandhan can
sustain the same.
To get fresh updates about different exams on your Facebook & Twitter timelines, subscribe to our pages created specifically for them. We will post only exam specific links on these pages:
Bank PO:
FB: https://www.facebook.com/pagalguybankpo
Twitter: https://twitter.com/PaGaLGuYBankPO
SSC & Other Exams:
FB: https://www.facebook.com/pages/Pagalguy-SSC-CGL-Others/879667042056262
Twitter: https://twitter.com/pagalguyssc
UPSC:
Facebook: https://www.facebook.com/pages/Pagalguy-UPSC/951926044840262
Twitter: https://twitter.com/PaGaLGuYUPSC