The Bandhan Story

Mohammed Yunus won the Nobel Peace Prize in 2006 for his Grameen Bank, a microfinance institution. Tamal Bandyopadhyay writes the story of Bandhan, the larger and understated Indian counterpart. The microfinance sector has opened itself up to equity and debt investors over the years. In 2010 SKS Microfinance (now Bharat Financial Inclusion Ltd) went public raising Rs 1,653 crore. In 2016 Equitas Holdings and Ujjivan Finance raised 2,170 and 885 crores respectively. The shares of both companies listed at a 10-30% premium to their issue price. Bandhan is not listed but it is also a universal bank unlike its peers (which have sought payments bank licenses). Peer into your debt fund portfolio and you may well find your money making its way towards Bandhan through its bonds and commercial paper; and from there to the women of rural India. West Bengal's financial history has been one of many tragedies. At Independence in 1947 India had 82 scheduled banks with about 25% located in the State of West Bengal. Partition dealt them a blow. Of the 38 banks that failed in 1947, 17 were in the state. West Bengal also has more companies raising money illegally from the public than any other state in India.104 of 194 companies against whom SEBI took action between mid 2011 and mid 2015 for issuing debentures and equity illegally were located there. Madhya Pradesh was a distant second with only 27 such companies. The Saradha group raised anything between 20,000 to 30,000 crore from the public (primarily in West Bengal) before it collapsed in 2013. It is this gap that Bandhan stepped into. It was founded by Chandra Shekhar Ghosh the son of a sweet shop owner in Tripura.

This article was originally published on October 10, 2016.