Bandhan, an India’s leading microfinance institute, has an employee base of 13000 individuals with expanded operations in 22 states and union territories with around 2,016 branches. It has loans outstanding of INR 54.04 billion and 5.2 million borrowers. In the context of profitability and sustainability, Bandhan has confronted with various issues as it highly depends on external sources of finance and because of the entry of the country’s banking regulator. On February 2013, India’s central bank declared a banking license policy that became an aid for Bandhan in tackling the difficult situation it had faced. The founder/managing director/chairman is now considering to turning Bandhan into a bank. Is there any need to bring changes in the current business? It might be helpful for Bandhan to reduce its cost of funds being a bank, as it would yield a new source of the fund i.e. clients’ deposits. But is it the right time to make this transformation? What could be the possible challenges for Bandhan in this transformation?
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