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Cases Publications

Bandhan: Advancing Financial Inclusion in India



Established in 2001 by Chandra Shekhar Ghosh to address the dual objective of poverty alleviation and empowerment of women, Bandhan was the largest microfinance institution (MFI) in India and the largest non-deposit taking MFI in the world. By 2013, it had grown to 2,016 branches across 22 states and union territories within India. With over 5 million borrowers and total outstanding loans of INR 57 billion (~US$1 billion), it had zero non-performing loans.


Case A sets up the need for and significance of financial inclusion, and the role of microfinance in the Indian context. It highlights Bandhan’s operational model and the various elements that explain its unique stature in the microfinance space. This case is poised at a junction when Ghosh is looking back with humility at Bandhan’s extraordinary achievements and contemplating plans to extend Bandhan’s reach by foraying into payment banking.


Case B is set at a time when Bandhan was about to embark on an organizational transformation that would convert it into a mainstream bank. In July 2013, supported by a Geneva-based investor, Bandhan had applied for a banking license to expand its operations by leveraging its network. And in May 2014, the Reserve Bank of India (RBI) had granted the license to Bandhan, making it the first MFI in the country to win a bank license, and also the youngest entity to be allowed to enter the banking space in India.


Ghosh had ambitious growth plans focused on the rural sector. Bandhan seemed to have built the right capabilities to be successful as an MFI. The cases allow for a rich discussion about the new capabilities that Bandhan would require as it shifted from being a pure MFI to a banking entity and how it should go about acquiring those capabilities. Was it preparing well to deal with the challenge of entering, surviving and growing in the banking industry while continuing to serve and grow in the MFI space? Could Bandhan develop a unique and innovative model to help it straddle both worlds?


With this license, Bandhan had been offered an opportunity to re-create the entire banking edifice in India. Participants have the opportunity to analyze the key issues in the cases and attempt to answer the question playing on everyone’s mind – how would Bandhan deliver on the goals of financial inclusion and sustainable banking?


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