In the wake of the ongoing Rs 12,700-crore scam at Punjab National Bank and other corporate defaults, chief of Bandhan Bank, which is set to launch its IPO next week, says banks need to focus on capacity building and make people more responsible in providing service than focus on money.
The Kolkata-based microlender turned universal bank, Bandhan Bank aims to raise up to Rs 4,473 crore (at a price band of Rs 370-375) in one of the biggest IPOs in the banking sector.
One who derives inspiration from poor women, the soft spoken CEO and MD of Bandhan Bank, Chandrashekhar Ghosh, spoke to Moneycontrol on how the IPO will help him scale up the bank's business and his plans to bring the promoter stake down to 40 percent (from 82 percent post IPO). Excerpts from the interview:
What are the benefits of the IPO for Bandhan Bank?
The first benefit of listing is compliance. Second, with the IPO, I can transparently pass on the information about the bank to depositors, borrowers and investors. Third, it is an opportunity for us to grow our business and scale up with the IPO money.
What will change for your bank post IPO? Also, given the weak credit growth in the system, will you see any impact?
We will grow and scale up post this IPO. Last three years, the year-on-year growth of credit has been 51 percent and deposits of course have grown 91 percent (zero base). This year (2017-18) in three quarters we have already seen credit growth of 31 percent and last quarter is usually high. And just because of lower denominator, our percentage might be lower but growth is still there and will not be stopped. So we will not be impacted by the system’s growth.
How much will your Capital adequacy ratio grow by with this IPO?
CAR will grow to 40 percent from 24 percent at present.
You will be required to bring down your promoter shareholding to 40 percent once you are a listed entity. The promoter stake after the IPO will be reduced to 82 percent from 89 percent at present. How do you plan to reduce it?
We have no plan as of now. Hopefully we will discuss it with the RBI and sit with them to ask their guidance on it.
Amid the negative environment due to the PNB scam, what is one thing you think needs to change in the public sector banks, or the banking industry overall?
It is not about public or private sector banks. It is one incident and is a big concern on the governance systems and controls, how they can be managed. It is a financial system and market and have seen these one or two incidents that have happened, but how fast is it addressed and how quickly we revise the system and processes and correcting them is important. Not all banks are such and sometimes public sector banks are better than private banks. So, it is a single isolated incident and not the problem of the banking system.
But the NPAs are also a concern in the industry and investors are losing money with stocks getting hammered. Individuals are also losing the trust and confidence in the system. Any suggestions to the government or RBI?
I am less experienced to suggest them but maybe we should build the capacity of the people. In any industry, we must focus on that internally. When we send a person for training, they must know our culture and values, that should be effectively implemented. So in-house capacity building of a bank is important and required on a continuous basis and in a good way, not in a leisure period way. Secondly, the institution must build the people’s morality, not in a financial way but educate them to be more morally responsible and to provide service to the community and people at large. That is missing I feel, it is more about money these days.