Bandhan Financial Services Pvt., the first new commercial Indian lender in more than a decade, kicked off operations with 501 branches across the country, with plan for a 26 percent expansion by end-March.
The closely held company, which started as a microlender, has 14.3 million accounts with a loan book of 105 billion rupees ($1.6 billion) and 19,500 employees, it said in a statement on Sunday. State Bank of India, the nation’s biggest by assets, has more than 200,000 unionized workers.
The Kolkata-based company, which counts Singapore’s GIC Pte. and the International Finance Corp. among its investors, is entering India’s mainstream banking industry as the regulator seeks ways to clean up books amid a surge in bad loans and a sputtering economy. Stressed assets are at the highest level since 2002 as four of India’s five biggest banks reported an increase in bad loans for the year ended March.
Bandhan starts with a capital of 25.7 billion rupees, which will soon be raised to 30.5 billion rupees, versus the minimum requirement of 5 billion rupees, according to the statement. That translates into a risk-weighted asset ratio of 44.54 percent, the lender said.
India has 27 state-run banks accounting for more than 70 percent of loans outstanding. The country’s 20 private lenders, led by ICICI Bank Ltd., held more than 19 percent of bank credit as of March 2013, while 43 foreign banks accounted for the rest, data provided by the RBI show.
As per the Reserve Bank of India guidelines for new banks, Bandhan will consider an initial public offering in three years, Chandra Shekhar Ghosh, founder and chief executive officer, told reporters in Mumbai on June 17. Bad loans were 0.1 percent of outstanding as of March 31, Ghosh said.