Bandhan Bank, which specializes in micro lending, is planning to increase its presence in the home loans market after it took over the portfolio from Gruh Finance in a recently concluded merger.
The loans of Gruh Finance now form 28 percent of Bandhan Bank’s advances book. Bandhan Bank’s share of microfinance loans down at 61 percent, as compared to 87 percent last year.
The share of home loans is likely to rise going ahead, Bandhan Bank’s MD & CEO Chandra Shekhar Ghosh said.
The bank’s merged loan book stood at Rs 64,186 crore as on September 30, 2019. Its gross non-performing assets (NPA) ratio and net NPA ratio stood at 1.76 percent and 0.56 percent respectively.
Ghosh said that the bank will continue to focus on affordable housing, with the average ticket size of such loans around Rs 9.5 lakh currently.
Bandhan Bank’s executive director designate Sudhin Choksey, who earlier led Gruh Finance, said that the credit growth in affordable housing should not get adversely impacted by the macro-level real estate sector problems.
“Almost half of the home loan portfolio that the bank took over from Gruh Finance are self-construction loans. That demand moves at a steady pace. Looking at our geographical presence, we believe there will be opportunities to continue with this kind of demand,” Choksey said.
The bank primarily foccussed on lending in West Bengal and Bihar, but after the merger, it has a bigger presence in Maharashtra, Gujarat, Rajasthan and Madhya Pradesh, which were the core markets for Gruh Finance.
Gruh Finance was set up by Housing Development and Finance Corporation (HDFC) in 1988. The housing finance company became part of Bandhan Bank on October 17, 2019.
Post merger, the promoter shareholding in Bandhan Bank eased to 60.96 percent, from 82.26 percent earlier. Its yet to meet the compliance level of 40 percent laid out by the banking regulator for private lenders.
In September 2018, the Reserve Bank of India (RBI) withdrew its general permission to open new branches and froze Ghosh’s remuneration for failing to meet the norm. As a result, the bank has to avail the regulator’s nod for every new branch it plans to open.
Ghosh said that the bank plans to bring down its promoter shareholding to 40 percent going ahead.