After becoming No. 3 behind HDFC Bank, ICICI Bank, Bandhan Bank to end aggressive expansion

Bandhan Bank has decided to end its aggressive network expansion after becoming the third-largest private sector lender after HDFC Bank and ICICI Bank in terms of the number of branches. The newest universal bank is expected to reach the milestone of 1,000 branches by this year end and would stop adding branches thereafter.

“We have already incurred costs on capacity building, infrastructure and people. Now these will earn for the bank,” said Bandhan Bank’s founder and managing director Chandra Shekhar Ghosh.

Total banking outlets as on March-end stood at 3,700 comprising 936 branches and 2,764 doorstep service centres as against 840 branches and 2,443 doorstep service centres a year ago, in addition to 460 ATMs now.

“As per the Reserve Bank of India data, we are now the third largest among private sector after HDFC Bank and ICICI Bank with 3,700 banking outlets. Would like to build upon that by adding 300 outlets after which 936 branches would become 1,000 and 2,700 DSCs to become 3,000 thus having 4,000 outlets by end of this year,” Ghosh told analysts during its maiden post earnings conference call.

Beyond that, Bandhan Bank, which started operations in August 2015 with 501 branches, would pause its rapid expansion plans to reduce its costs.

“We have done the bulk of the investments in branch network and going forward we wouldn’t be opening branches as aggressively we did in the last two years. So, since we have expensed out most of our investments in the branch network, there wouldn’t be any major expenses other than business expenses,” an official of the bank told analysts.

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To cater to this large network, Bandhan expanded its workforce to 28,159 employees by March end, up from 24,220 at the beginning of the year. In order to get quality manpower, it had opened its own grooming institute NextGen Bankers’ Programme for bankers proficient in both banking and micro-financing business.

“The first batch of 210 graduates from our training institute — Bandhan School of Developmental Management — has joined the bank after three months of internship,” Ghosh said.

With this there would be an improvement in cost to income ratio which currently stands at 35%, the official said.

The Kolkata-headquartered Bandhan Bank has reported its first earnings after its initial public offer, reporting a 20.3% growth in its bottomline for the March quarter at Rs 388 crore.

By Sumit Moitra, DNA Money