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  • Case Study 7 Anusha Datta 1152190001 Synopsis

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    Angel Aliya
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    Bandhan Bank started as an NGO focused on microfinance to help underserved rural communities gain access to financial services and literacy. It became an NBFC in 2006 and focused on lending to retail customers rather than large corporations. By starting with small loans and separate units to serve the poor, Bandhan has been more successful than other banks at financial inclusion. The International Finance Corporation (IFC) was instrumental in Bandhan's transformation into a full bank by investing $29 million in 2011 and $150 million total, which allowed Bandhan to expand lending and services to more rural and semi-urban borrowers.

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    B&F CS 7

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    Bandhan Bank started as an NGO focused on microfinance to help underserved rural communities gain access to financial services and literacy. It became an NBFC in 2006 and focused on lending to retail customers rather than large corporations. By starting with small loans and separate units to serve the poor, Bandhan has been more successful than other banks at financial inclusion. The International Finance Corporation (IFC) was instrumental in Bandhan's transformation into a full bank by investing $29 million in 2011 and $150 million total, which allowed Bandhan to expand lending and services to more rural and semi-urban borrowers.

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    © All Rights Reserved
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    12 views1 page

    Case Study 7 Anusha Datta 1152190001 Synopsis

    Uploaded by

    Angel Aliya
    Bandhan Bank started as an NGO focused on microfinance to help underserved rural communities gain access to financial services and literacy. It became an NBFC in 2006 and focused on lending to retail customers rather than large corporations. By starting with small loans and separate units to serve the poor, Bandhan has been more successful than other banks at financial inclusion. The International Finance Corporation (IFC) was instrumental in Bandhan's transformation into a full bank by investing $29 million in 2011 and $150 million total, which allowed Bandhan to expand lending and services to more rural and semi-urban borrowers.

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    Banking & Finance

    Case study 7
    Anusha Datta
    1152190001
    Synopsis
    The case talks about Bandhan Bank and how it has been tremendously
    successful in not only giving financial security to the rural parts of India
    but also in spreading financial literacy. There are not too many
    commercial banks in the microfinance field. The bank initially started
    out as an NGO and achieved its status as an NBFC in 2006. The case
    mentions the concept of financial inclusion which is of great importance
    to some sections of the society. It is a huge challenge for the poor to get
    access to organised and secured financing enterprises. Bandhan has been
    successful in bringing financial inclusion to a large section of the
    population. The bank’s core commitment to the marginalised section has
    given it an edge over other banks . Bandhan’s strategy was to start by
    lending to retail customers and not jump right into corporate banking
    which was already quite saturated. They also have a separate sector
    which only caters to the poor and unbanked population. MFI’s are
    required in the country for many reasons , few of them being – creating
    sustainable activities in order to increase income , Empowerment of
    women , Reducing external shocks. The bank borrowed from banks at
    interest rates as high as 18% which implies that it charged 20-25% per
    annum from small borrowers. Bandhan had separate functional business
    units with clearly defined roles and responsibilities to monitor its
    operational needs. IFC played a central role in Bandhan’s transformation
    into a bank. It came in with a $29 million equity investment in Bandhan
    in 2011 – this was the largest investment in private sector in India
    considering the microfinance crisis. Ever this that , IFC made further
    debt and equity investments to the institution with the financial
    assistance amounting to - $150 million. Now that Bandhan has
    transformed into a full fledged bank , they will be able to offer small
    ,unsecured loans to many more rural as well as semi urban borrowers . It
    will also be able to widen the range of financial services.

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