Assam situation improving, no concerns as yet: Chandra Shekhar Ghosh, Bandhan Bank

Shares of Bandhan Bank have been falling on concerns over Assam protests. How realistic is the problem in Assam for Bandhan Bank?
If you see the third quarter results, the business growth was fantastic. The last quarter of every financial year is generally good. But if you come to this efficiency in collection, it has in fact improved to 93.57 per cent from 92.97 per cent in Assam. It is gradually improving. The bank’s performance as per collection efficiency across the country also improved to 99 per cent. Excluding Assam, it stands at 99.12 per cent. Assam situation is improving day-by-day. January had particularly been good.

Let us not talk about February. But what really has changed between December and January?
As I told you, the collection efficiency has improved. Whatever the trend that I have been looking at, it is good. The demand for new loan is high so is the demand for loan closure.

At 3.5 price-to-book value, some believe that Bandhan Bank presents a compelling buy opportunity. But others feel it is still expensive. What would you say?
We are only focussing on the business. As a bank, our deposits now stands at Rs 54,000 crore with CASA percentage at 34 per cent. Retail deposits accounts for 76 per cent and note that they are not the micro credit borrowers’ deposit whose deposit accounts fpr only 5 per cent of the total deposit.

Across the country, there is acceptance for our brand. The 42 lakhs customers of Bandhan Bank across 1,010 branches across the country are happy with us with on NPA and growth fronts. This is Bandhan Bank’s strength. We would like to commit to our investors, our depositors and our borrowers.

Give us the outlook on growth and profitability fronts?
It is too early to say that our borrowers in Assam will not return back and not repay. Our old borrower who had stopped payments are are now coming to repay their earlier instalments. But we have taken some precaution. We made Rs 200 crore worth of extra provisions in the December quarter. Last year, some of the account were coming in as stressed and we immediately made full provisions on that front. We are very conservative. Meanwhile, as a bank, we are entitled 0.25 per cent provision for the standard asset, but we are continuously doing 1 per cent provision on our standard assets. And therefore, we don’t see Assam risk getting very big so that the bank needs to make further provisions.

The microfinance business remained largely unaffected during the time of demonetization. If a business did not see many NPAs during demonetisation -- not just Bandhan but everybody else, the Assam case and what is happening in West Bengal frankly are small things and the market should not get really worried about it. Is my interpretation right?
No. At the time of demonetisation, there was no impact on the Bandhan Bank because that time Bandhan as a bank was entitled to accept the old note. But it was not possible for the MFI. So, this is on one side. We had one advantage on that front.

One cannot link one case to the other case. Also, if we are working more in the rural areas where awareness level is low, even rumours can sometimes have an impact. In that sense, I feel that the ongoing issue is not that big.

If I summarise: The management of Bandhan Bank is of the view that Assam is a problem, but it is not a scary problem. It feels that things will only look up and markets and investors should not get nervous about Assam exposure. Is this what you want to say?
Absolutely. In the last few weeks I saw things improving gradually.