Bandhan reduces interest rate for micro loans

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Bandhan Bank Ltd., announced on Monday that it would reduce the lending rate for micro loans by 0.6 per cent or 60 basis points (bps) from July 18, 2016.

This means its micro loan rate will be reduced from 20.5 per cent to 19.9 per cent, according to a release. Before commencing operations as a bank, in August last Bandhan, as a microfinance entity, was providing such loans at 22.4 per cent. After its transformation into a bank, it reduced its rate by 1.4 percentage points or 140 bps, making it 21 per cent.

The bank further reduced its micro-lending rate by 50 bps in April 2016, making it 20.5 per cent. With the latest round of lending rate reduction, Bandhan Bank has pared is micro loan rate by 2.5 percentage points or 250 bps in three stages in less than 11 months since it started operations as a universal bank.

Currently, Bandhan Bank operates across 29 States and Union Territories through a network of 688 branches, 2,022 Doorstep Service Centres (DSCs) and 237 ATMs. It has over 87.7 lakh customers, 21,000 employees and a deposit-base of around Rs.15,000 crore deposits.

Bandhan is the first bank to be set up in the eastern part of India post-Independence. This is also the first instance of a micro-finance entity being transformed into a universal bank.

The Kolkata-headquartered bank has two divisions — micro banking and general banking — offering a suite of retail financial solutions, including a variety of savings and loan products. Currently, the savings bank account interest rate is 6 per cent for balance above Rs.1 lakh and 4.25 per cent balance up to Rs.1 lakh.

For term deposits, the maximum interest rate offered is 8.25 per cent for one to three years, with an additional 0.5 per cent for senior citizens.

Bandhan received RBI’s ‘in-principle’ approval in April 2014 and the final nod on June 17, 2015.