'Our objective is to keep improving Casa ratio'

'The Casa ratio is at 33.4 per cent, which has to keep improving. Right now, there is a bit of liquidity pressure in the market.'

Bandhan Bank posted a 47 per cent jump in net profit in the first quarter on lower bad loans.

Ratan Kumar Kesh, who became the interim managing director (MD) & chief executive officer (CEO) of the Kolkata-headquartered lender effective July 10, discusses the bank's growth strategy over the medium term in an interview with Manojit Saha/Business Standard in Mumbai.

Bandhan Bank is going through a transition phase as a new MD & CEO will be taking charge after Chandra Shekhar Ghosh, the founder, MD & CEO, decided to retire.
How will the bank ensure a smooth transition?

Mr Ghosh had clearly articulated (his views on this) when he took the decision to retire by the end of his tenure.

He said the bank should decisively come out of the post-pandemic problems.

Second, he said that leadership layers should be strongly in place.

I think after the first quarter results, we can say with a fair degree of confidence that we are definitely out of the Covid pandemic problems.

Earlier, you saw signs of improvement, and now you can see we are definitely out of it.

I joined the bank five quarters back. A few more important leaders have joined since.

So there is a strong mix of experience within the organisation and experience from outside at various levels.

We now have a strong leadership layer both at the MD minus 1 and minus 2 levels to take the bank forward.

So the leadership is in place which will ensure a smooth transition.

This leadership team has also put out the strategy for the next three years - Bandhan 2.0.

We prepared the strategy when Mr Ghosh was still around and it got approved by the board.

We have a strong board and the board continuity remains to guide us through this journey.

What is the update on the new CEO appointment?

The search committee and the board are working on it. We are pretty much on track with the process.

Bandhan Bank was a microfinance institution which was converted into a commercial bank in 2015, and has diversified itself.
What more can be done on the diversification front?

When we started the operations, the bank was 100 per cent microfinance.

Today, we have a sizeable secured housing finance portfolio.

Our retail book is growing by 80-85 per cent, which is largely secured (around 70-80 per cent).

Commercial banking is growing year-on-year (Y-o-Y) at 30-35 per cent.

So, we are below 35 per cent in microfinance group loans.

So far as geographical diversification is concerned, we are well present in terms of branches out of eastern India.

We are about 55 per cent outside the east.

Both on the lending and deposit side, the contribution of geographies other than the east is fairly strong.

What will be the growth strategy of the bank in the medium term?

Our strategy is liabilities-led growth. The deposits will grow faster than the assets. In Q1 our deposits grew 23 per cent and assets grew 21 per cent.

We will continue to grow deposits at a faster pace than loans because we also want to bring down the credit-deposit ratio closer to 90 per cent by next year, from 95 per cent now.

What is the proportion of current and savings account (Casa) deposits to total deposit?

The Casa ratio is at 33.4 per cent, which has to keep improving. Right now, there is a bit of liquidity pressure in the market.

Our medium objective is to keep improving the Casa ratio and go closer to 40 per cent.

Feature Presentation: Aslam Hunani/Rediff.com