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Bandhan Financial Services – India’s biggest micro-finance institution – plans to launch Bandhan Bank IPO in three years. The Kolkata based company, which recently received an approval from the Reserve Bank of India (RBI) to set up retail banking operations, counts International Finance Corporation (IFC), Small Industries Development Bank of India (SIDBI) and Singapore’s GIC among its investors. Under RBI rules, every new bank has to get listed on stock markets within three years of starting operations.
Bandhan is one of the two firms getting bank licenses in more than a decade. The other one is infrastructure lender IDFC. Bandhan Financial Services would be the non-operative financial holding company of Bandhan Bank which will start operations in August.
We would like to lend mainly to small and medium enterprises, in addition to those we are already lending. I would not like to go to corporate lending
– Chandra Shekhar Ghosh, director of Bandhan Financial Services.
As of March 2015, Bandhan operated 2,022 branches and had a loan book of INR9,500 crore, serving 64 lakh customers. The company has received INR1,020 crore investment from IFC, SIDBI, and GIC in recent months. IFC and GIC have said they may invest additional INR500 crore in the company to help with the transition. Going forward, the company plans to add 500-600 branches to its network along with 250 ATMs. Despite the expansion, Bandhan will continue to be a regional player with a strong focus on eastern and north-eastern India.
Bandhan is India’s first micro-finance company to get a banking license, although some players from this domain are already quoted on the bourses. Prominent among these is SKS Microfinance Ltd which had a tumultuous history. Banking IPO’s have had a better track record, thanks to a highly effective regulator. Thus, investors would be keenly awaiting the IPO of Bandhan.
IDFC, another player to have bagged banking license does not plan to bring an IPO. Its banking subsidiary will get listed through a demerger of the infrastructure lender.