Bandhan Bank on Sunday began operations as a full-fledged bank with 501 branches and 1.43 crore accounts across the country, becoming the newest member of the estimated USD two-trillion Indian banking industry.

Bandhan said it is starting operations with 1.43 crore accounts, around Rs.10,500 crore loan book and 19,500 employees. To begin with, it has got 501 branches, 2022 service centres and 50 ATMs across 24 states.

It plans to have 632 branches and 250 ATMs in 27 states by the end of fiscal year 2016, the bank said after Finance Minister Arun Jaitley inaugurated its operations here at the Science City Auditorium in Kolkata, at a function attended by regulators, policy makers and luminaries from financial sector and corporate India.

The bank said over 71 per cent of the branches will be in rural India, including at least 35 per cent in unbanked rural pockets.

State-wise, West Bengal has the maximum number of branches 220, followed by Bihar 67, Assam 60, Maharashtra 21, Uttar Pradesh and Tripura 20 each, and Jharkhand 15.

The Kolkata-headquartered bank has two divisions - micro banking and general banking - and will offer complete retail financial solutions, including a variety of savings and loan products.

Chandra Shekhar Ghosh, Founder, Managing Director and CEO of Bandhan Bank said, “Our business philosophy is ‘customer first’ We are a universal bank and we will have equal respect all our customers - big and small. Today, all of us in the Bandhan family are rededicating ourselves to fulfil the demand of every Indian - banking as a fundamental right. We are committed to usher in a new era in Indian banking.”

Mr. Jaitley said, “West Bengal is known for producing several intellectuals, but no entrepreneurs. The launch of Bandhan Bank will not just boost the growth of Bangla entrepreneurs, but signify the return of entrepreneurs to West Bengal.”

The size of banking assets in India reached USD 1.8 trillion in the fiscal 2013-14 and is expected to touch USD 28.5 trillion by 2024-25.

However, the Indian banking sector is highly fragmented with 46 commercial banks jostling for business with dozens of foreign banks as well as rural and co-operative lenders. State banks control a significant chunk of the market share.

The savings bank account interest rate has been fixed at 4.25 per cent for balance up to Rs. 1 lakh and 5 per cent for balance above Rs. 1 lakh. For term deposits, the maximum interest rate has been fixed at 8.5 per cent for 1-3 years, with an additional 0.5 per cent for senior citizens.

The RBI licensing norms stipulates that a new bank must have at least Rs. 500 crore capital. Against this, Bandhan has started with Rs. 2,570 crore capital which will soon be ramped up close to Rs. 3,052 crore.

“The eastern states including eastern Uttar Pradesh, Bihar, West Bengal, Orissa and the north-eastern states have the potential to raise the GDP rate of India. The Central Government will support any initiative like that of Bandhan Bank that can lead to enhanced growth rate and prosperity of the nation,” Mr. Jaitley said.

West Bengal Finance Minister Amit Mitra said, “Bandhan started with the twin objective of women empowerment and poverty eradication. With a repayment record of 99 per cent, the organisation has been successful in its objectives.

“Now, the challenge for Bandhan Bank is to push Bengal’s credit deposit rate from around 68 per cent to the national average of over 76 per cent.”

RBI Deputy Governor H.R. Khan, who was also present on the occasion, said, “Bandhan Bank has been born at a challenging time of the Indian economy. With 11 payment banks and two universal banks being added to this sector, banking space in India is getting crowded.

“The need of the hour is to focus on cost minimisation and customer convenience, digital literacy, partnership to cooperate and compete with other banks, and provide protection to customers by having a holistic approach towards banking.”

Among others, the inauguration event in Kolkata was attended by Atiur Rehman, Governor of Bangladesh Central Bank, LIC Chairman S K Roy, ITC Chairman Y C Deveshwar, BSE CEO Ashish Kumar Chauhan, NSE chief Chitra Ramkrishna, Kotak Mahindra Bank’s MD Uday Kotak and IBA Chairman Arun Kaul.

Bandhan Bank is the first instance in India of a microfinance entity transforming into a universal bank. It received an in-principle approval from the RBI in April 2014 and the banking regulator’s final nod on June 17, 2015. Its investors include IFC, SIDBI and Caladium Investment Pte.Ltd, a company managed by GIC Special Investments Pvt Ltd.

Bandhan began as a not-for-profit microfinance enterprise in 2001 with the idea of making a significant contribution towards alleviation of poverty by empowering women. It transformed itself into a non-banking finance company in 2006. (PTI The Hindu)