Kolkata: Bandhan Bank is in talks with International Finance Corporation to raise about $200-250 million debt capital by issuing infrastructure bonds, primarily to grow its affordable housing portfolio, a person familiar with the matter said.
The funding with a tenure of seven years is likely to be priced between 7.5% and 8.2% a year, the person said.
The capital will bolster the Kolkata-based bank’s tier 2 capital and capital adequacy ratio as a whole. Its capital-to-risk (weighted) assets ratio (CRAR) was at 17.9% at the end of December 2024, comfortably above the minimum regulatory requirement although it fell from 19.1% seen a year earlier. The tier 2 capital was merely 1%.
Bandhan Bank did not respond to the ET queries on the matter as of press time Thursday. Mail sent to IFC also remained unanswered.
IFC, the private investment arm of World Bank, holds 16.5% in Bandhan Financial Services, which owns 100% in Bandhan Financial Holdings, the non-operative holding company for Bandhan Bank.
The development finance institution first invested in Bandhan Financial Services in 2011, four years before the bank was set up.
The Kolkata-based lender is now targeting to grow home loan business along with other retail loans while reducing the share of micro loans, which has been a major stress point for it since Covid-19. The bank had a stress pool of Rs 7,500 crore, largely from the microfinance portfolio built through the joint liability group-based lending model.
The bank had an emerging business portfolio at Rs 58,020 crore at the end of December last year, out of a total loan portfolio of Rs 1.17 lakh crore. Total group-based micro loans were at Rs 38,760 crore. Home loan portfolio was at Rs 28,440 crore.
The microfinance institution-turned bank aims to bring down the share of emerging business loans to 26% by 2026.
The bank is under the scanner for alleged irregularities in micro lending.
The National Credit Guarantee Trustee Company (NCGTC) is doing an audit on Bandhan Bank’s insurance claims against non-performing loans extended by it under a government guarantee scheme. The bank recovered Rs 1,600 crore from the credit guarantee fund for the micro units (CGFMU) in the second quarter last fiscal and claimed another Rs 1,290 crore in the subsequent quarter when the audit was initiated.
