According to C S Ghosh, MD and CEO of Bandhan Bank, the pandemic situation has not severely affected its economy then banks will have an opportunity to tap the rural sector in the post-COVID-19 scenario. He added that the future opportunity lies in the hinterland because the rural economy is less affected so banks, including Bandhan, would like to focus on rural enterprises with good network condition. The lender bank said collections efficiency will automatically go up as usual once the lockdown is opened. The private lender, Bandhan bank has distributed around Rs 3,500 crore in rural areas last month.
The lenders’ collection efficiency ratio has increased substantially, which shows people are ready to repay loans. As per MSMEs, which contribute to the supply chain, also offers a potential opportunity for rural banks. At present, the flush with funds and credit is slow so there is a need to mobilize the deposits. It has made sufficient provisioning against risks which means a surface after the moratorium period which is over at the August.
The pandemic situation of Covid-19, itself makes a global crisis but the situation was entirely different because people have not lost their assets, homes or other saving so in that sense once the lockdown opens collections will pick up naturally. By comparing with natural calamities, there is a minimum of 0.4 per cent and a maximum of 1.5 per cent Days Past Due (DPD) 90 has come. If the crisis politically affected by the people then it can go from the range of 4 per cent to 10 per cent. The major difficulty faced by the rural people is with the collection or repayment because of the lockdown as they couldn’t come to the branch directly to deposit their amount.
Ghosh added that 52% of borrowers have been with them for more than 4 years and their data and the behavioural pattern is completely known to the bank.51% of borrowers have taken a single loan from Bandhan therefore 31% have taken a second loan from any other MFI or bank. So the first bucket of 51% borrowers is an institutional strength for them. Bandhan Bank’s model is very different from other banks because their risk based on pricing is lower as compared to others. The bank has the plan of geographical expansion in the future they would also like to have a diversified loan book that will be compared to today’s book.
