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BANDHAN: Commercializing a Social Cause
EXCERPTS
CHALLENGES FOR MICROFINANCE IN INDIA
Access to credit, more often than not, shapes a nation’s economy. However, in India’s case, this presented one of the major reasons for its being rooted in poverty. When the RBI, NABARD, SIDBI, the entire Indian Banking System, and the huge number of MFIs as well, did their best to take financial services to every household of the country, the resistance they met in terms of geographical, social, economic, political, and financial terms was humungous. The target market for microfinance in India was huge, consisting largely of people too poor to be worthy of loans from banks. The high uncertainty of repayment and risk of default, lack of information on the creditworthiness of the borrower, the requirement of collateral which borrowers could seldom provide, the transaction costs, the weak legal framework for ensuring settlement, caste and gender disparity in lending, and inefficient government policies, were some of the major challenges MFIs faced... |
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CHANDRA SHEKHAR GHOSH: THE MAN AND HIS TIMES
Born in the small town of Agartala in Tripura , Ghosh belonged to a family of refugees who came to India after the Bangladesh- Pakistan war . His father owned a sweet shop that provided for his family of seven...
BANDHAN: THE CREATION OF THE BOND
Bandhan (meaning bonding and togetherness) was started as a Non Government Organization (NGO) in 2001 in an attempt to eradicate poverty and raise the living standard of the millions of impoverished in India by taking financial services to them. Ghosh began in a small town in Hooghly by giving small loans to poor borrowers. He started with a small capital of INR 0.2 million (US$ 3333.33 ), made up of his savings and inputs from relatives.
BANDHAN: MODUS OPERANDI
Built largely on humanitarian values, Bandhan’s secret ingredient for success lay in the CREATE ...
TAKING THE RIGHT STEP: GHOSH’S DILEMMA
In February 2013, the RBI invited applications for new banking licenses, to be accompanied by the applicant’s proposed model for a bank. The objective was to increase the number of banks in India in an attempt to build a wider and deeper financial structure and increase competition in the banking industry.
THE ROAD AHEAD
In April 2014, RBI announced its decision to accept Bandhan’s proposal and granted it an ‘in principle’ banking license that required it to start the operations of its bank within eighteen months.
EXHIBIT
Exhibit-I: Presence of Bandhan in different Indian States (April 2014)
Exhibit-II: The Map of India
Exhibit-III: Major RBI guidelines for licensing of new banks in private sector
