Difficult to predict loan growth through October: Chandra Shekhar Ghosh, CEO, Bandhan Bank



Chandra Shekhar Ghosh, Managing Director and CEO, Bandhan Bank

A third wave of Covid-19 would be a challenge for microfinance clients and postpone some of their loan applications, according to Chandra Shekhar Ghosh, chief executive and CEO of Bandhan Bank. Ghosh told Mithun Dasgupta that in the first quarter of this fiscal year, the bank’s average loan amount to microfinance clients decreased compared to the same period last fiscal year. Edited excerpts.

During the first quarter of this fiscal year, the Emerging Entrepreneurs Business portfolio of Bandhan Bank (EEB, formerly the microbank segment) grew 12% year-on-year. Going forward, what is the lending growth scenario in this segment?
During the first wave of Covid-19 in the last fiscal year, [there was business growth] in the fourth quarter… about 20% over one year. During this exercise, although the second wave was more severe than the first, we have [seen] this type of growth during the first quarter. Yes [there is no third wave] In the current quarter, loan growth will not be significantly different from last year. If the third wave occurs during this time, it would be a challenge for clients and it would delay some of the loan applications. Because… business owners can overcome two challenges, but they would be afraid if they continued to face more. I feel that until Durga Puja [in October], it would be difficult to comment on loan growth during this fiscal year. But we are very positive based on the current situation.

Do you offer new loans to new microfinance clients? And what about the average size of loan tickets?
As a bank, we cannot say no to [a new customer]. But during the pandemic, new loans to new customers don’t happen as much as they normally do. Now we have stricter loan criteria for new customers. During the first quarter, the average loan size decreased compared to the same period last year.

In the EEB segment, the collection efficiency for T1FY22 was 86%, excluding postcode. What is the situation now?
If you see our total collection amount and our requests for the EEB wallet, the actual collection efficiency was 98%. This means that the clients who are in arrears have also started to repay the amount. This is a good sign for the bank. The efficiency of collection will improve day by day with the help of customers. We hope this will normalize soon.

In the first quarter of this fiscal year, gross slippages amounted to Rs 1,661 crore, of which Rs 1,036 crore came from the BEE portfolio. While the bank has seen gross slippages decrease quarter over quarter, do you think they will decrease further in the second quarter?
We cannot predict any slippages for Q2, given the current situation. If slippages do occur, it would not be a source of concern for our bank when I see the efficiency of collection increasing. In the first quarter, we found that approximately 74% and 84% of our NPA customers and restructured customers, respectively, were paying.

At the end of T1FY22, the bank’s collection efficiency in Assam was 67%. Has it improved since?
Assam is very different today. When the whole country is open, mainly Assam and Kerala are in complete lockdown. Assam is experiencing a serious second wave of Covid-19 and many neighborhoods are completely closed. We have no credit exposure in Kerala.

What is the update on the one-time special relief announced by the government of Assam for microfinance borrowers?
The state government made it very clear that this was not about debt forgiveness and stressed the importance of maintaining good credit discipline. It is a very strong and positive message for customers. However, the government did not mention the timetable for the implementation of the regime. We are waiting for that. I hope the government is working on it.

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