Bandhan Bank stands out at BS Banking Annual 2019 for all-round performance

Ghosh was commended for his deep knowledge of lending, having technology-focused lending operations and keeping the work force motivated

Chandra Shekhar Ghosh, founder, managing director (MD), and chief executive officer (CEO) of Bandhan Bank, is the Business Standard Banker of the Year for 2018-19, just four years after he turned his Kolkata-based microfinance institution into a scheduled commercial bank.

The unanimous decision was taken by a high-profile jury of five, chaired by former Reserve Bank of India deputy governor S S Mundra. Other members were former State Bank of India chairman Arundhati Bhattacharya, Vice Chairman and CEO of Housing Development Finance Corporation Keki Mistry, Ican Investment Advisors Chairman Anil Singhvi, and Saurabh Mukherjea, chief investment officer and founder of Marcellus Investment Managers.

The jury said Ghosh, 59, deserved the coveted award for the bank’s impressive all-round performance. The bank had the best ratios, and the highest return on assets (4.25 per cent) with a cost structure that is the lowest in the banking sector (cost to income ratio of 0.32).  

The filters used for the jury table were two: the banks’ asset size should be Rs 50,000 crore and above as of March 2019, and there should have been growth in profit prior to provision in the past three years. Only 14 banks qualified, and given the eventful year that it was, shortlisting three candidates was a relatively easier job than in previous years.

From the start, Bandhan’s numbers were “too good”, as one jury member put it, and the jury feared that it would be a “one-horse race”. But another private sector bank CEO emerged as a worthy competitor, as he turned around a relatively slow-moving bank into a name to reckon with, while maintaining a good set of numbers.

The jury deliberated at length about the merits and demerits of the two banks and the bankers, besides their leadership and management style. One particular aspect that was looked at was the difficult environments where these banks were mainly focusing on.

Bandhan Bank and Ghosh stood out. The bank’s branches are frugal, but are successful with their “high-touch” model. Most of Bandhan’s clients are repeat customers, but the loan book has grown 42 per cent on a three-year compound annual growth rate basis, even as deposits have grown 53 per cent in that period.

The growth rate has benefited from a lower base, but the net non-performing assets (NPA) ratio was contained at 0.58 per cent. The gross NPA ratio was at 2.04 per cent at the end of 2018-19. The net interest margin (NIM) was at 8.96 per cent at the end of the financial year.

Numbers aside, Ghosh was commended for his deep knowledge of lending, having technology-focused lending operations, being a tough negotiator, and keeping the work force motivated to carry on with a banking approach that involved developing a personal touch with customers. “The jury considered the governance aspect of the various contenders and, ultimately, the vote went in favour of Bandhan Bank and Chandra Shekhar Ghosh because the growth trajectory of the bank with almost all the ratios was quite strong and way above the competing bankers,” said Mundra, chair of the jury.

“There were also the facts that there was consistency in growth, and the bank took efforts to bring other entities into its fold to diversify its portfolio and geography. The bank was also able to maintain a low-cost model of delivery, had controlled the asset quality well, and protected its NIM while keeping a good blend of low-cost structure,” the jury chairman said.’

The bank’s net profit for the full year was Rs 1,952 crore at the end of March 2019, up 45 per cent from the year-ago period.