Bandhan Financial Services Private Limited, a microfinance institution (MFI) based in Kolkata, India, has decreased its annual interest rate on loans from 24 percent to 19.1 percent on a reducing balance. Indian newspaper The Economic Times recently stated that this could cause a “rate war” among microfinance institutions (MFIs) in the country. Chandra Shekhar Ghosh, the managing director of Bandhan, has encouraged other MFIs to follow suit, as have the state-owned Small Industries Development Bank of India (SIDBI) and the Reserve Bank of India, the country’s central bank. Mr. Ghosh explicitly stated that the MFI has “decided to take a knock in [its] profits to help poor borrowers.” As of March 31, 2009, Bandhan had total assets of USD 170.9 million, a gross loan portfolio of USD 103.8 million, and over 1.4 million active borrowers.

By Christopher Maggio, Research Assistant

About
Bandhan Financial Services Private Limited

Description
Bandhan Financial Services Private Limited is a microfinance institution (MFI) based in Kolkata, India. It was founded in 2002. As of December 31, 2009, it operates in 14 states in India with 1,008 branches. It offers loans for microenterprises as well as health emergencies.

Just the Facts
? Country of Incorporation: India
? Year Founded: 2002
? Total Assets: USD 170.9 million (as of 31/March/09)
? Gross Loan Portfolio: USD 103.8 million (as of 31/March/09)
? Number of Active Borrowers: 1,454,843 (as of 31/March/09)
? Return on Assets: 8.66%
? Return on Equity: 125.62%
? Area of Operation: India
? Participant(s)/Backer(s)/Investor(s): Punjab National Bank (PNB), Small Industries Development Bank of India (SIDBI)
? Products: Microenterprise Loans, Health Emergency Loans
? Main Funding: Loans, Equity
? Chairman and Managing Director: Chandra Shekhar Ghosh

Additional Resources:
Economic times article entitled ‘Bandhan slashes lending rate to 19.1%’: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/finance/Bandhan-slashes-lending-rate-to-191/articleshow/5887762.cms

MicroCapital’s Microfinance Universe: Bandhan Financial Services Private Limited

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