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Informist, Tuesday, Jul. 21, 2026

 

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--Bandhan Bk MD: To focus on granular deposits, growing CASA, asset quality
--Bandhan Bk MD: Consciously cut down bulk deposits to contain cost of funds
--Bandhan Bk MD: Can't depend on just deposit growth to fund credit growth
--Bandhan Bk MD: Garnered INR 300 mln via FCNR deposits so far
--Bandhan Bk MD: Considering leverage policy under FCNR deposits scheme
--Bandhan Bk MD: Will like to tap RBI's swap facility for overseas borrowing
--Bandhan Bk: Plan to open another 150 branches in FY27
--Bandhan Bk: Cost to income ratio to stay high for 1 yr on tech spending
--Bandhan Bk: NIM may decline slightly over next 2 quarters
--Bandhan Bk MD: Will try to maintain NIM over 6%
--Bandhan Bk MD: Will prefer mobilising deposits over borrowing to fund credit
--Bandhan Bk: IT costs to remain elevated for some time

 

NEW DELHI – Bandhan Bank Ltd. has so far mobilised foreign currency non-resident (bank) deposits amounting to INR 300 million under the Reserve Bank of India's scheme and expects the pace of mobilising deposits to grow in the coming days, Managing Director and Chief Executive Officer Partha Pratim Sengupta said Tuesday. The private-sector lender is also working on the leverage policy under the FCNR(B) deposits scheme, he said in a post-earnings media call.

 

"... so far we have garnered INR 30 crores (300 million) from the first FCNR(B). We have just started the product," Sengupta said. "We are also giving one of the better interest rates at 7.1%. Therefore, we expect that we can garner much more in the coming days."

 

Bandhan Bank is "deciding" on the policy for leverage on deposits under the scheme, Sengupta said. "We have not yet finalised (the leverage policy). I think within a couple of days, we will come out (with the leverage policy). It is being considered by the policy department how many times we can actually do a leveraging." Leverage refers to the multiple of the FCNR(B) deposit that a bank is willing to lend against.

 

On Jun. 8, the RBI had announced measures to bear the full hedging costs of banks that raise fresh three- to five-year FCNR(B) deposits by Sept. 30. This helped the banks to attract more foreign currency deposits by raising their FCNR(B) deposit rates.

 

Bandhan Bank also plans to raise funds through the RBI's swap facility for overseas borrowing, Sengupta said. The central bank has allowed banks to exclude the hedged transactions related to FCNR(B) deposits, external commercial borrowings, and overseas foreign currency borrowings raised under its concessional swap facility from the computation of net overnight open position. The RBI has also offered a concessional hedging rate of 1.50% per annum for external commercial borrowings from public-sector undertakings and overseas foreign currency borrowings by authorised dealer banks through its swap facilities.

According to Sengupta, the bank cannot depend on just deposit growth to fund credit growth. "While we are making all efforts to increase our bulk deposits, at the same time, we are aware of the fact that we may need to resort to some other sources of funds to fund the credit," he said. Although the bank may raise funds under the RBI's concessional swap facility, it will prefer to mobilise deposits to fund credit growth.

 

Bandhan Bank's gross advances grew 16% on year to INR 1.56 trillion in the June quarter and deposits grew 7% on year to INR 1.65 trillion. The bank's bulk deposits, including certificates of deposit, fell nearly 10% on year and 1% sequentially to INR 414.4 billion. The management said the reduction in bulk deposits was a "conscious strategy" though this resulted in the bank's overall deposit growth being subdued at 7%. The strategy to reduce bulk deposits was aimed at improving the quality and granularity of deposit franchises and to reduce the cost of funds, it said.

 

The private-sector lender's cost of funds in the June quarter was 6.4%, 10 basis points lower than in the trailing quarter and 60 bps lower than in the year-ago quarter.

 

The Kolkata-based lender has reported a 35% on-year rise in its net profit to INR 5.02 billion. The bank's net interest income was up 6% at INR 29.21 billion. "Looking ahead, our focus continues on strengthening granular deposits, growing CASA (current account savings account), enhancing customer engagement, and improving operational efficiency and asset quality," Sengupta said.

 

Furthermore, the management said it does not prefer market borrowing over deposits. "It all depends on the cost of funds and our credit growth. Our first and foremost aim is to garner deposits," Sengupta said. However, "if I have got some great proposals and I (the bank) could meet the requirements after fulfilling the regulatory requirements of maintaining the SLR (statutory liquidity ratio), CRR (cash reserve ratio), for positive, we resort to some borrowings and that borrowing is very positive."

 

Bandhan Bank's net interest margin in the June quarter was 6.2%, up 2 bps on quarter but down 16 bps on year. The margin remained stable despite the significant headwinds from increased funding costs, Sengupta said. "Going forward, this 6.20(%), maybe a little bit, may become less in the coming two quarters, but definitely our aim is that to get as more business as we can do, maintaining the NIM," he said. This suggests that the fall in net interest margin might weigh on the bank's profitability in the next two quarters.

 

During Apr-Jun, the bank's total expenses grew nearly 8% on year and over 2% sequentially to INR 48.76 billion, due to higher operating expenses. Its cost-to-income ratio rose to 61.5% from 59.6% a quarter ago and 52.1% a year ago. The management expects the cost-to-income ratio to remain high for a year due to higher spending on technology. The bank's operating expenses on information technology rose 92% on year to INR 1.56 billion. "That also is a substantial expenditure. So, these tech costs will continue," the management said.

 

On branch expansion, the management said the bank aims to open another 150 in the financial year 2026-27 (Apr-Mar). The bank added 44 new branches in the past 12 months, taking its total count to 6,388 by June.

 

Bandhan Bank detailed its quarterly earnings after market hours Tuesday. Shares of the bank ended at INR 208.83 apiece on the National Stock Exchange, down 1.2% from Monday.  End

 

Reported by Shweta and Priyasmita Dutta

Edited by Shubhayan Bhattacharya

 

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