MICROCAPITAL BRIEF: Bandhan Sells $474m in Microloans to HDFC Bank, IDBI Bank, Yes Bank

Bandhan Bank, an Indian microfinance institution that is organized as a commercial bank, recently sold INR 32 billion (USD 474 million) of “priority sector loans to more experienced private sector rivals to help them meet lending targets.” Indian regulators require banks to invest certain percentages of their holdings in “priority sectors” such as agriculture. Chandra Shekhar, the Managing Director of Bandhan Bank, said that Bandhan Bank had used “inter-bank participation certificates” to sell the loans to India’s HDFC Bank, IDBI Bank and Yes Bank.

As of March 2015, Bandhan had a loan book of INR 95 billion (approximately USD 1.5 billion) and approximately 2,000 branches in 22 states and union territories in India. As of 2014, Bandhan reported 5.4 million active borrowers, return on assets of 5 percent and a return on equity of 28 percent. As of 2015, HDFC Bank reported approximately USD 101 billion in total assets, IDBI reported total assets of USD 55 billion and Yes Bank reported INR 910 billion (USD 14 billion) in total assets.

By Jason Wei, Research Associate

Sources and Additional Resources

About the Bandhan Bank

Founded in 2002 as Bandhan Financial Services Private Limited, Bandhan Bank is a commercial bank based in Kolkata, India, that received a banking licence from the Reserve Bank of India (RBI), the central banking authority in India, in June 2015. Bandhan’s investors include the Punjab National Bank (PNB), the World Bank Group’s International Finance Corporation (IFC) and the government-backed Small Industries Development Bank of India (SIDBI). As of March 2015, Bandhan had a loan book of INR 95 billion (approximately USD 1.5 billion) and approximately 2000 branches in 22 states and union territories in India. As of 2014, Bandhan reported 5.4 million active borrowers, return on assets of 5 percent and a return on equity of 28 percent.

About HDFC Bank

HDFC Bank Limited was incorporated by Housing Development Finance Corporation Limited (HDFC), a private-sector Indian housing finance company, when the Indian government allowed the establishment of private sector banks in 1994. HDFC Bank offers a range of services to retail and wholesale banking customers, as well as specialized services for non-resident Indians. Headquartered in Mumbai, the bank has a network of 3,403 branches in 2,171 cities and towns across India. As of 2015, HDFC Bank reported approximately USD 101 billion in total assets.

About IDBI

Industrial Development Bank of India (IDBI) is a public sector bank based in Mumbai, India. The bank offers personalized banking and financial solutions to its clients in the retail and corporate banking arena. As of 2015, IDBI reported total assets of USD 55 billion.

About Yes Bank

Yes Bank Limited is a private-sector, commercial bank headquartered in the city of Mumbai, India. The bank’s business lines include wealth management and institutional, corporate, investment and retail banking. The bank has developed a microfinance initiative known as “Yes Sampann” in collaboration with Accion, a US-based microfinance nonprofit organization. Yes Bank is listed on the National Stock Exchange and the Bombay Stock Exchange in India. The organization has a network of approximately 500 branches as of 2013. As of 2015, Yes Bank reported INR 910 billion (USD 14 billion) in total assets.

[1] Bandhan Bank sold Rs 3,200 crore to priority loans to bigger lenders, http://economictimes.indiatimes.com/industry/banking/finance/banking/bandhan-bank-sold-rs-3200-crore-priority-loans-to-bigger-lenders/articleshow/52293560.cms

MicroCapital Universe Profile: Bandhan Bank

MicroCapital Universe Profile: HDFC Bank

MicroCapital Universe Profile: IDBI Bank

MicroCapital Universe Profile: Yes Bank

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