Bandhan Bank | Bandhan Bank share price: Management team largely in place to take Bandhan Bank forward after Chandra Shekhar Ghosh retires, says CFO

On Bandhan Bank liquidity, deposit growth & strategy

Rajeev Mantri: Last quarter saw liquidity challenges in the market. Despite that, Bandhan Bank has been able to grow the deposits fairly well. We ended the year with about Rs 1,35,000 crore of deposits which recorded almost a 25% growth year-on-year. Within that, the quality of the deposits also was pretty good with almost 37% being current accounts and savings accounts and retail and CASA being almost 70%.

If we look at it, the deposit profile of Bandhan Bank is fairly granular in detail and retail and over the last four to five years we have seen stickiness of the deposits really continuing and maintaining and I think that is the testimony that it is not just about the deposit growth, it is really also about the quality of the deposits and how exactly the bank is able to make sure that it provides the right services, the right kind of conveniences to the customers so that the deposit customers continue to place the trust and the faith with the bank. I think the push in this regard is going to continue. We are actively looking at how to continuously improve the value proposition that we give to our clients. So, for instance, we are looking at how to improve our savings account proposition even further by reaching out to the right customers with the right kind of proposition. We are also looking at how we re-energise some of our branches so that the branches become really conducive for people to come in and place their deposits with us, as well as try and come up with capabilities which can foster further current accounts. It is like an overall targeted strategy that we have to continue doing the good work that we have done in the past, but making sure that the deposit drive continues and like we are saying in our strategy, liability first approach, which means that the advances will need to continue, but we need to continue to grow liabilities even faster which is the deposits primarily.

Let us talk about a few of the overhangs which investors had. One of them was the provisioning made last time. Now, we want to understand that is it all provided now? Is there any surprise coming for investors in the next few quarters?
Rajeev Mantri: We had mentioned in our investor call immediately after the results announcement and we had gone through our policies that we have in the bank in terms of looking at what is the portfolio that is eligible for a technical write-off and that is the kind of work that we have done in terms of making sure that we take a hard look at that particular portfolio. It has helped us in terms of reducing our NPA portfolio from almost Rs 8,700 crore down to about Rs 4,700 crore. We have taken that particular clean-up exercise in March which takes care of a large part of the book that was prior to the year FY2022 and earlier and it has brought our gross NPA levels down to almost 3.8%. We still have further journey to climb on that particular front. What is heartening to see is our slippage rates are really coming off.

If you look at FY23-24, in the first three quarters, our quarterly slippages was in the region of 1,300 crores and in the last quarter we saw it coming down to almost Rs 1,000 crore. We expect that the portfolio quality should continuously improve and for a small portion of the portfolio, we have to take a harder look in terms of recovery or any further action that we need to do.

What should investors expect in the next few quarters? Will there be more surprises or any shocks which are left? I am asking you because there was an overhang of the credit guarantee fund where NCGTC was conducting the exercise. Is that audit complete?
Rajeev Mantri: So, the audit that the National Credit Guarantee Trust Corporation had started is in progress. We have provided the required information and the explanations to them. So, they are in progress to make sure that the audit gets completed. We have requested them to see how that can be expedited. We provided, of course, all the information. So, we will see what the outcome of the audit comes out to be.

From our perspective, of course, that is a key area of focus to make sure that we progress on that. I do not think that we will be looking for major surprises and stuff like that. I think that is clearly not the endeavour. We have taken a harder look at the book and cleaned up a large portion of the NPA in the March quarter itself. We will be looking to make sure that we continue on our strategic path. We have devised a full three-year plan and three-year strategy. It is pretty much grounded.

We have done a bottoms-up in terms of looking at every business, what kind of growth it can have and we are relentlessly focusing on making sure that our strategy is executed in the right fashion, which basically includes growing the areas that we want to grow in. We are actually looking at expanding our secured book even further or faster than the unsecured book and want to make sure that we continue on that path.

All the targets that we set for ourselves in terms of revenue, expenses, etc, we want to make sure that those continue. So, that is the focus in terms of making sure that we continue on that particular path. And we will, of course, have to keep watching any externalities, etc, that happen, which is beyond anyone’s control. But the bank has developed very good resilience. It has taken a harder look in terms of bringing the balance sheet, in terms of the NPA levels down. Where we stand, we see that the bank is sufficiently well-capitalised. We have good liquidity standing.

Our NPAs are brought under control to a large extent and we are seeing a very good trend. And our profitability was not bad. We had Rs 2,200 crore of profitability, which of course, because of the technical write-off was reduced, but otherwise normalised basis was even higher. We want to make sure that that path continues and that will be the focus in the coming quarters as well.

Ever since Mr Ghosh’s announcement about not extending his tenure, there have been a few questions on who will be the next MD and CEO of Bandhan Bank? Are you still finalising the names? Has the names already been sent to the regulator or you are waiting for the approval?
Rajeev Mantri: This is a process which is being managed by the board, which is working very closely in terms of what should be the right process to be followed in terms of looking for the right person. So, I think that process is being managed. At this stage, it is something which the board only manages in terms of where exactly we are at. I think they are actively making sure that they follow the right process and the steps.

In due course, the right names will be provided to the RBI. The tenure of Bandhan Bank’s current MD and CEO, Mr Chandra Shekhar Ghosh is coming to an end on the 9th of July as he has announced his retirement. So, we are making sure in terms of giving him proper farewell and ensuring that the right transition plan is created. This is actively managed by the board and they are making sure that the process gets followed. So, we will definitely get to hear in terms of how exactly that moves forward.

Bandhan Bank was actively preparing for this kind of transition with the kind of hiring we have already seen. So, where do we lie in terms of giving the handover? Is it already being given? Is the team ready? Is the plan ready?
Rajeev Mantri: The management team is largely in place. We have two executive directors. Ratan Kumar Kesh, who is the chief operating officer and ED, joined almost a year ago and then Rajinder Babbar, who is our chief business officer and executive director; he joined in March. So, both of them are there in terms of ensuring that their respective areas are taken care of. I joined in February and then a number of other management positions were also being filled.

So, at this stage, the management team is largely in place and making sure that whatever strategy the bank has created is being executed in the right fashion. I think our MD and CEO has great trust in terms of how the team has shaped up as well as how exactly it is taking its step forward in terms of making sure that the business gets managed well. We are fairly confident overall as a management team in terms of how we take it forward.

Is it going to be an internal candidate or external candidate or bank is open for both?
Rajeev Mantri: I really do not know how to answer that. I think the due process is being followed and of course, we will come to that.

Regarding the vision and the planning of the bank for the next three to five years, where do you see Bandhan Bank in 2030?
Rajeev Mantri: We are clearly set for growth. As we said, we are a universal bank. We are working our way towards becoming a true universal bank in terms of making sure every aspect of the banking area that we are involved in grows further. So, the bank will continue to grow in a healthy and prosperous way and at the same time making sure that we are available for our customers in the right areas.

We are geographically very well diversified and we will continue to diversify further. We are present in all the states and union territories in India and therefore, that endeavour will continue. We are investing in our branches and we have become a formidable distribution as well as branch network. Bandhan Bank will grow in a healthy way and we also want to adopt a lot of digital ways of enabling our customer experience as well as how exactly we internally look at the processes. So, I would say digitally assisted, enabled and high in productivity and efficiency and we will continue to grow, that is the kind of vision that we have for the bank.