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Informist, Saturday, Feb. 14, 2026

 

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--Bandhan Bank ED: Focus on tech-driven products, platforms to drive growth
--CONTEXT: Comments by Bandhan Bank ED Ratan Kumar Kesh in an interview
--Bandhan Bank ED: Advances to grow 15-17% over next 2-3 years
--Bandhan Bank ED: Committed to cut unsecured loans to 40% of book by FY27
--Bandhan Bank ED: Working pretty aggressively on developing CBDC platform

 

By Priyasmita Dutta

 

NEW DELHI – Bandhan Bank will keep digital innovation at the very centre of its growth strategy in order to be at par with "best in class" banks, Executive Director and Chief Operating Officer Ratan Kumar Kesh said Friday. The bank is planning to launch a host of products – including use of alternative data like utility bills, cash-flow patterns for onboarding "New-to-Credit" rural customers, Kesh said, adding that these innovations will fuel better growth.

 

The bank's priorities are centred on achieving deposit growth that outpaces advance growth, with emphasis on granular retail deposits. "Over the next two-three years, we expect advances to grow 15–17% and to that extent, the deposit growth will be slightly higher than that," Kesh told Informist in an interview.

 

While a large portfolio of rural customers falls under the microfinance sector, Kesh said that the bank is firm on its goal – to lower the share of the microfinance segment to less than 40% of its loan book by the end of 2026-27 (Apr-Mar). "Given that other products will be growing at a faster pace which is retail, housing and commercial, microfinance will grow roughly in the range of 5-8?pending on the cycles," according to the executive director.

 

According to Kesh, bifurcated data is not available on the quantum of investments being made in technological innovation, but the operating expenses-to-asset ratio, which is currently at 3.9%, may inch up to 4.1% over the next few quarters, and that will be owing to the increasing investment in technology.

 

The executive director said the Kolkata-based lender is working on the Central Bank Digital Currency platform as well. "I will not be able to give a specific timeline (for its launch) but for sure, we are working on it at this point in time pretty aggressively, and we should be able to do it as soon as possible," he said.

 

Bandhan Bank reported a net profit of INR 2.06 billion for the December quarter, with its deposits growing 11.2% to INR 1.57 trillion as on Dec. 31 and advances growing 10% on year to INR 1.45 trillion. On Friday, shares of the bank closed 2.4% lower at INR 165.44 on the National Stock Exchange.

 

Below are edited excerpts of the interview:

 

Q. What is your medium-term strategy to drive growth?

A. If we look back, in 2020, a significantly large percentage of our advances were microfinance and unsecured. Then COVID had a significant impact, and it hit all the people at the bottom of the pyramid. So our portfolio also got impacted with everybody else in the industry. We also had several other climate-related issues, like the Assam flood, cyclone Amphan, which impacted our microfinance book.

 

One of the key strategies that we adopted in 2023 and then augmented again in 2024 was that we should move to a more secured segment. So instead of becoming 60% unsecured and 40% secured, we would flip it over in the next two years and go to 40% unsecured and 60% secured.

 

Other focus has been to move to more geographies in the country, rather than being focussed on the eastern region. It's in the spirit of becoming a truly universal bank.

 

The third focus is that our deposit book has had a significant amount of chunky deposits, and we wanted to make it more granular deposit focussed, which is retails deposits and not bulk corporate deposits. Fourth, we want to grow in product segments like housing in retail, which is the consumer segment. We will also grow more in secured products like commercial vehicles, commercial equipment, gold loans.

 

Now, we will ensure that, in order to do all of this, we will drive a significant amount of digitisation, because customers like you and I, if you need to do banking with Bandhan Bank, you will be comparing us with the best in class bank.

 

And you would obviously demand the seamless onboarding capability, seamless payment and transaction capability, a sophisticated mobile and digital app. Companies would need very strong transaction banking capability, whether it is cash management, transaction banking, forex, merchant, and all of that. So we need to bring in a lot more technology platforms.

 

We are getting onboarding journeys digitised. Our transaction banking platform, collection platform and the payment platform are all getting modernised as we speak. And every quarter we will be bringing in a lot more products.

 

Q. Despite the progress, microfinance continues to be a huge chunk of your loan book...

A. As we speak today, in the last two quarters, we have been improving on that. If you see the latest quarterly results, we have demonstrated the early signals of green shoots of the portfolio quality improving significantly. So going forward, as we see, with all the guardrails that we have implemented based on the regulatory prescription, the situation will only improve.

 

I think there are enough and more signals that there are green shoots coming, and going forward, the portfolio will be a lot cleaner. We have already become 60% secured and our retail book is growing at a very rapid pace of above 70%, with largely secured products. Our commercial banking book is also growing at more than 45%. Again, largely secured by very good quality and top-rated clients.

 

Q. How much will you be investing in technology?

A. Operating expenses-to-asset ratio, which is currently at 3.9%, may inch up to 4.1% over the next few quarters. That will be because of increasing investments in technological innovations.

 

Our cost-to-income ratio has also gone up slightly, and that is largely because of our investment in technology and also because we are bringing a lot many more products. We are also adding some more skill sets to launch them and are also spending more money on their distribution.

 

Q. In terms of newer digital products, you will be bringing the "New-to-Credit" onboarding mechanism for rural customers. What are your internal targets with this new product?

A. We don't have any such specific targets. Our target is pretty simple. We have got roughly around 6,500 footprints across the country, which includes approximately 4,400 banking units and another roughly 1,800 are retail branches. Our endeavour is to take all retail products, whether it is personal loan, auto loan, two-wheeler, gold loan, commercial vehicle, commercial equipment, to every part of the country.

 

Q. How do you see the new products, including this, contributing to your loan book?

A. We have set a target that deposit growth will be faster than loan growth. That, I think, has broadly been happening over the last few quarters, and we will augment that a lot more with many products which are coming. Over the next two to three years, we expect advances to grow 15–17% and to that extent, the deposit growth will be slightly higher than that.

 

Q. The "New-to-Credit" model will also be largely unsecured, without any collateral. Will that not add to microfinance stress?

A. The microfinance portfolio or the emerging enterprise segment will continue to be unsecured to begin with as of now, although in one of the segments we are trying to make it a more secure product. If you ask me about risk, underwriting is about risk and the ability of a bank to take risk and yet extend credit to the borrower. Now, in order to do that, we just don't take a blind call. We have got certain rule engine like bureau score, alternate data, among others, that scrubs through before you extend a loan to a borrower.

 

There are a lot of things that are taken care of as part of the underwriting principles to be able to protect the bank's interests in terms of having a good credit quality. So, yes, there is an element of risk, and we are conscious of it and that is why we have got early warning signals. That is why we have also got the capabilities for a good recovery mechanism.

 

Our focus is that by the end of 2026–27 (Apr-Mar), we will be roughly around 40% unsecured and 60% secured. And given other products will be growing at a faster pace, which are retail, housing and commercial, microfinance will grow roughly in the range of 5–8?pending on the cycles, and we will obviously be taking an appropriate credit call to decide how much of the growth will happen in this sector.

 

Q. In terms of digital innovation, a lot of banks are experimenting with newer products like Central Bank Digital Currencies. Any plans on that front?

A. Yes, we are already working on newer products like the Unified Lending Interface platform, we have already gone live on that. We are currently working on CBDC (Central Bank Digital Currency) as a platform. All of these digital public infrastructure and regulator-driven products and platforms are extremely useful, very powerful, well thought-through and futuristic. And we are building our capabilities to book into some of these platforms to power our own growth through them.

 

Q. What is the timeline for launching the CBDC platform?

A. I will not be able to give a specific timeline, but for sure, we are working on it at this point in time pretty aggressively, and we should be able to do it as soon as possible.  End

 

Edited by Ashish Shirke

 

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