NEW BANDHAN CEO TO TAKE OVER IN NOVEMBER: Derisking loans may be first order of business

Partha Pratim Sengupta, who will take charge as managing director and chief executive officer (MD and CEO) of Bandhan Bank in early November, has his task cut out.

- MANOJIT SAHA

The Kolkata-based lender, which converted from a microfinance institution into a universal bank, is now in its 10th year of operation. Over the years, the bank has reduced the share of its microloan book; however, microloans still account for around 50 per cent of its total loan portfolio. At ₹61,910 crore, Bandhan's microloan book is among the largest in Indian banking.

One of Sengupta's key priorities will be to engineer a business transformation while gaining the confidence of all stakeholders, particularly the regulator. According to bankers, the Reserve Bank of India's (RBI's) discomfort with banks engaging in microloans was evident from last November's circular on risk weights. While increasing risk weights on consumer loans, the RBI exempted non-banking financial loans from higher risk weights on loans to microfinance customers. Banks, however, were instructed to raise the risk weight for their microloans.

“Bandhan has to lower the share of microloans and increase the share of secured loans. While doing so, it needs to maintain healthy margins and return on assets (RoA),” said a senior banker.