Mumbai: Kolkata-based Bandhan Group expects the new Bharatiya Janata Party -led government in West Bengal to improve coordination with the Centre and revive investment and infrastructure spending in the state. These are developments that founder and chairman Chandra Shekhar Ghosh believes could open up fresh opportunities for the lender and its core microfinance business.
“We will be in the best place to reap the benefits if the state and the BJP government do well. This is a big opportunity because a lot of industry will go there, and then small enterprises will also develop,” Ghosh told Mint. “He (chief minister Suvendu Adhikari) very well understands about the business.”
Earlier this month, BJP made its power debut in West Bengal, ending the Trinamool Congress’s three-term rule under Mamata Banerjee, and bringing the state and the BJP-led National Democratic Alliance (NDA) government at the Centre under the same political alignment.
With much of West Bengal’s employment driven by micro, small and medium enterprises (MSMEs) and microfinance, Ghosh is hopeful that “dying” industries such as tea, jute, textiles and handicrafts will revive and support manufacturing growth. He also sees tourism as a major opportunity, saying growth in the sector could drive related improvements in safety, roads and civic infrastructure.
West Bengal now accounts for about 30% of its business, Ghosh said. The state contributes 24% to Bandhan Bank's loan book and 40% to deposits, as per SBI Securities.
Some experts also see Bandhan getting a boost from the regime change. The government's infrastructure push and renewed industrial reforms would provide a significant fillip to its loan growth, said Sunny Agrawal, head, fundamental research at SBI Securities. “The new government's focus on agri-related subsidies would help grow the agriculture loan book. This would be beneficial since PSLC (priority sector lending certificates) cost has risen due to substantial contraction in the microfinance loans,” he said.
Bandhan Bank’s microfinance institution (MFI) collections in West Bengal and Assam have improved but they warrant close monitoring amid recent elections and the likely impact of the El Nino phenomenon, Emkay Global Financial said in a note on 29 April, while also flagging slower-than-expected growth and delayed asset-quality recovery as key risks. The El Nino augurs below normal rains that could hurt rain-dependent farming.
Regional lenders such as Bandhan Bank could benefit from a gradual recovery in Bengal, but the pace is seen slow, as per an 11 May Ambit Capital report. “Despite Bandhan’s efforts to diversify its asset mix, with the non-MFI book now comprising 65%, asset quality remains volatile," it said, adding that is largely due to its high geographical concentration which is constraining the ability to mobilize deposits.
Promoter power
Bandhan had started out as a non-profit in 2001, and transitioned into a non-banking financial company (NBFC) in 2006 before becoming a bank in August 2015. The bank started with 2,523 outlets, and today has a network of 6,530 branches.
A highlight of the journey has been the dialogue with the regulator on promoter shareholding. Bandhan Financial Holdings is the non-operative financial holding company (NOFHC) and acts as the promoter of Bandhan Bank.
At the time of the bank’s listing in March 2026, the promoter holding fell from 89.6% to 82.3%. However, the bank missed the deadline to pare promoter stake to 40%, prompting a ₹1 crore penalty from the Reserve Bank of India (RBI) in October 2019 and curbs on branch opening, which were later partially reversed in February 2020.
RBI norms require a bank to trim promoter holding to 40% within three years of starting operations, and to 20% in 10 years and 15% in 12 years. RBI has now given the bank another five years to lower promoter holding to 26%.
“On a review, they have given us time till after five years because they also feel that three years is very early to reduce the stake. The new regulation says the promoter can hold up to 26%. We now have 40% stake, and we have time up to 2030 to reduce that,” Ghosh said.
A strong advocate for promoter-driven businesses, Ghosh believes it is that nature of Bandhan that has allowed it to grow for 25 years. “It is because of the promoter, because of the founder,” he asserted. “There is a need of the person, who is a promoter, to create the vision, and others will follow to reach that. Our job is to create that vision.”
Ghosh stepped down as the managing director and chief executive of Bandhan Bank in July 2024, after leading the bank for almost a decade over three tenures in a row. In November 2023, the board reappointed him for another three years, but he announced his resignation in April 2024.
RBI allows bank CEOs to remain in charge for 15 years or till they reach 70 years. The cap for CEOs who are promoters or major shareholders of the bank is 12 years.
Comparing himself to a “proud father”, Ghosh, now 65, said his satisfaction now stems from seeing Bandhan being professionally managed by five managing directors heading the group companies.
The promoter family's role will be confined to Ghosh’s ownership in the group with no management interference to ensure good governance. “There is no intervention from family members. It will be very professional,” he said, adding his role will be to keep “the vision” and provide “some direction”.
Strong governance has always been a priority for Ghosh. “I am trying the best way to ensure governance. There is a perception of a promoter: that if they are a promoter, they are bad. It should be changed,” he said, adding that promoters get a bad name due to some isolated incidents in the industry.
Scaling businesses
While the group is exploring options to trim promoter holding, a merger of the holding company and the bank is not on the cards, Ghosh said. “Structurally, we cannot do it because RBI has given us the licence with this structure,” he said, adding that the preference is also to hold the other companies under the parent group, instead of under the bank, unlike most of its peers. “I feel that is better, the companies will be independent and not under the bank," he said, adding that the bank will have no control over the mutual fund and insurance businesses.
Bandhan Financial is the promoter of Bandhan Life Insurance and Bandhan Asset Management. The plan is to allow these businesses to “stabilize” and achieve scale before the group considers listing them or venturing into new lines of business, Ghosh said, adding that the opportunity is huge, given the under-penetration of financial services.
“In the mutual fund, there is no need for capital. We only need capital for the insurance business, and whatever we have in hand is sufficient to fund it for the next two-three years,” Ghosh said, adding that he doesn’t believe in bringing a foreign partner.
Bandhan Bank, on its part, could explore capital raising options, including bringing in a strategic investor to fund growth capital, Ghosh said, emphasizing that he has no say in the matter, and that the decision will have to be taken at an independent board level.
Bandhan Bank’s shares are currently trading at a price-to-earnings multiple of 26.22, much below its five-year average of 39.38 times. So far in 2026, the bank has been a standout performer among mid-sized lenders, with its shares having risen 37%, far ahead of peers such as Karur Vysya Bank (10%), RBL Bank (7%), AU Small Finance Bank (1%), YES Bank (3%) and South Indian Bank (0.4%).
“Bandhan Bank trades at attractive valuations against peers. And, we believe steady execution towards RoA (return on assets) expansion would be a key catalyst for further re-rating,” SBI Securities' Agrawal said, adding that the management has laid down a plan for RoA expansion to 1.6-1.7% by FY27 end.
Growth in the home finance business under Gruh Finance, acquired by Bandhan in 2019, might be slower as merging and integrating the NBFC with the bank has taken time, Ghosh said.
Bandhan Financial had also acquired UK-based IT and business process firm, Genisys Group, for ₹100 crore in November 2024. Renamed Bandhan Technologies, the 1,300-employee firm now offers technology and digital marketing services to healthcare and logistics companies in the US and UK.
“We would like to grow it even in India, especially in the BFSI sector,” Ghosh said, adding that this would take some time as the firm is building artificial intelligence capabilities and hiring experts.