GIC set to invest Rs 1,020cr in Bandhan

KOLKATA: After International Finance Corporation (IFC), Bandhan Financial Services, the promoter of Bandhan Bank, has roped in Singapore's sovereign wealth fund GIC for pumping equity into the bank. SIDBI is also an existing investor in Bandhan.
Bandhan chairman Chandra Shekhar Ghosh said GIC will invest Rs 1,020 crore in tier-I capital of the proposed bank. Post-investment, Bandhan will have a capital base of approximately Rs 3,200 crore against the Reserve Bank of India's stipulated capital requirement of Rs 500 crore to set up a new bank.Bandhan's current capital base is around Rs 1,500 crore with 21% capital adequacy ratio (CAR).
IFC last week decided to invest Rs 580 crore. The newbie lender is raising Rs 1,600 crore from the market as tier I capital for the proposed Bandhan Bank. However, Ghosh did not disclose the share valuation at which IFC and GIC are pumping in funds, which the Bandhan chairman said is the biggest equity investment in any micro-finance company.
IFC already has 11% stake in Bandhan Financial and SIDBI has 10%. The rest is with trusts and employees. IFC bought the stake in 2010 for Rs 160 crore.
In December 2009, Sidbi acquired 10% in Bandhan for Rs 50 crore. "With the new investment, we are ready to launch a well-capitalized, robust universal bank which can focus on building assets and managing risks competently," Ghosh added. The bank will operate about 600 branches across India, with 10 million depositors and a loan book of close to Rs 8,000 crore.
RBI's in-principle licence for new banks was issued in April 2014 and is valid for 18 months. Bandhan is one of the two entities and the only microfinance non-banking finance company (NBFC) that received the in-principle licence. Bandhan has 70% of its branches in rural areas. It has 2016 branches across 22 states with strong penetration in east and north east, where banking penetration is less compared to other part of the country.
Ghosh added that it has given loan to over 62 lakh borrowers. The total customer strength of Bandhan is 1.2 crore, which includes micro-insurance customers.