Bandhan, the biggest microfinance institution in India, has 13,000 staff members and 2,016 branches in 22 states and union territories, 5.2 million borrowers and loans outstanding of INR 57.04 billion. Yet, its overdependence on external sources of funds by the country's banking regulator together with recent measures have started worrying Bandhan's leadership, from a sustainability and profitability outlook.
The banking licence policy declared by India's central bank in February 2013 arrived as an opportunity for Bandhan to resolve the dilemma. Managing director and the creator chairman is presently trying to address the question of transforming Bandhan into a financial institution. Does the current business necessitate any change? As a bank, the cost of capital for Bandhan would come down, as it would be able to raise funds by drawing deposits from customers. But is Bandhan willing to be a bank? How does it meet with the many different challenges in achieving business transformation?
PUBLICATION DATE: July 21, 2014 PRODUCT #: W14280-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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