Manappuram mgmt. in the latest concall mentioned that Bandhan is quite aggressive in micro lending in West Bengal and that’s why they have turned cautious. Also highlighted some over leveraging concerns but I think they wanted to say that Bandhan is using its advantage of low cost deposits in being very aggressive.
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That might very well be the moat of Bandhan .Looming presence in Bengal well entrenched n other MFIS find it very difficult to uproot them.
Most of Bandhan customers are in 4th to 5th cycle n this successful track reord is nothing to scoff at. Bandhan liabilities sourcing is exemplary n many Bongs having burnt thier fingers with chitfunds like Sardha trust bandhan under ethical CS Ghosh a lot and this TRUST becomes a big moat for bandhan who pass on the low cost sourcing benefit to their customers becoming among the lowest cost MFI in the world.Potential of MFI still remains large in Bengal n NE India specially if compared with Indonesia n Bangladesh where MFI has been thriving for 50 years now n business is at much larger size vs Bengal.
With merger of Gruh many of MFI over concentration concerns has been taken care.Focus of entire mgmt is on merger .Affordable housing n MFI are 2 of fast growing segments n both Mr Sudhin Choksey of Gruh who is only 60 n has been given a big say and full independence to grow business in East India & Mr Ghosh remain one of the most ethical mgmt one will find in India with superb execution track record. Please do read the Last AR of Gruh to fully understand GRuh journey n business potential of the merged entity.
Opp size is huge for both MFI & Affordable housing.ratios are the best in the world & mgmt rock solid.
Some concerns remain on risky nature of non collaterized lending in MFI & availability n willingness of skilled manpower to shift to Bengal a backwater in financial world. sale overhang also there which is punishing the price but GRUH share price was also broken to 245 odd before qip . Bandhan may be suffering due to this sale overhang as these FPIS n instt may want the share cheap in the world best MFI with superb ratios…
https://www.moneycontrol.com/news/business/hdfc-sells-gruh-finance-shares-worth-nearly-rs-1665-crore-4392341.htmlThe shares sold on BSE were bought by Societe Generale, while those sold on NSE were bought by SBI Blue Chip Fund, Goldman Sachs Singapore, The Master Trust Bank Of Japan, and Nomura Funds Ireland, the data showed.
Discl-Invested
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Today Bandhan Bank is down 6% . Why down because CNBC reported
'Lots of Women Organizations protested in Assam against MFIs ’ - Macquarie
Tweeted by 2-3 Anchors too
Got some time today morning. Went through Asomiya, Bengali and English dailies from 14th to 19th Nov.
This is the news.
This happened only in City of Jorhat. NOT IN any city of Assam… One Asomiya Nespaper (Asomiya Pratidin) reported in City news of 16th Nov
Noise VS Reality.#1
Also I read Asomiya paper…Organization has submitted memo against MFIs in that locality to local MP
Noise vs Reality #2
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Thanks @nil_71
If we analyse the recent fall in prices, it started around 3 weeks back on 30th Oct 2019. Incidentally its the same day when RBI imposed penalty of 1 Cr on promoters for not following set benchmark of reduction in promoter holding. Bandhan has corrected approximately 13%-14% since then, this correction gains more significance as Bank Nifty has gained more strength in same period. Technically it looks heading towards 500. I have observed similar behaviour of correction in prices of 10%-15% in other scrips where promoter holding in under close watch of regulators.
Do you think that this hangover on promoter holding is adding fuel to protests of women organization in north east (core area for Bandhan) ?
Promoter holding is a noise. Just ignore it. Focus on fundamentals. Believe me, Bandhan Chairman has gone some insurmountable issues ( Tamal B’s book)
Yes over exposure in East and NE is an issue. But, in Banking, people said, you have to trust the jockey. …
With 6-6.5 PB…any bad news will scare investors…But with Mr. Ghosh at the helm, you have to hold your patience…
This incident, reinforces that fact, most of the market players, including analysts have very little clue on …what is happening in the ground level. They also don’t have resources to do the same
Fact based reporting is a huge casualty and the lesser , we get trapped , the better
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Bandhan Bank has around 18% of AUM from Assam . So even if we think that the protests are material , the exposure is not huge . Besides in microfinance , the interest charged is high - This is a feature of this business , so this is nothing new . However the loan collection is an issue and it will be good to hear the management on this . Also there were issues raised by a research house on the concentration of business in west bengal . However concentration could also be seen as a positive goodwill for the company , as to create a footage at the ground level takes a lot of time and resources . So if you have strength in a particular region - I take that as positive . Also above a member correctly stated that in banks you are betting on the jockey .
( Views are only for academic discussion , no recommendation)
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Bandhan Bank shares are tumbling on news of some women protesters in Assam seek a ban on microfinance companies & overhang on promoter holding beyond permitted levels by regulator.
Several organisations under the banner of Jagrata Mahila Suraksha Samaj staged a protest against microfinance companies which they alleged had ruined the rural economy. They demanded that these microfinance companies should be banned from operating in Assam.
According to equity research analysts, Bandhan Bank is the most significant player with an asset base in Assam. Analysts say over 15-18 per cent of its total AUM is catering to Assam.
The protests against microlenders in Assam started (infact was first reported) in last week of October 19) where Bandhan has nearly 350 Doorstep Service Center (in 29 out of 33 districts in Assam). It consists nearly 15-16 per cent of the microloan portfolio.
Reports suggest that the issue was severe around two weeks back – primarily in one district of Assam (Dibrugarh) – and since then has seen its intensity diminish. Bandhan’s On-time Repayment Rate in Assam currently stands 98.5 per cent (and 99 per cent excluding the 11 impacted DSCs).
Management indicated that collections are already back to near-normal and it expects full normalcy within the next couple of weeks. Management believes that this is not a material event and drawing from similar past experiences and the strong customer connect that Bandhan enjoys, they have invariably seen turnaround in 3-4 weeks time.
The market behaviour and investors reaction is surprising (although its normal) that Bandhan lost 20% market cap due to this news which can impact 15-18% of its portfolio. Rumors / unconfirmed events always eat up market cap and later we come to know that it has no or minimal impact. For long term investors, such events have provided wonderful opportunities to accumulate with caution (if they have conviction in the growth story)
Disc : Invested & may add at comfortable levels
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A more inhuman way of Bandhan (alleged… as I don’t have any proof other than this news article but bank remains 
)
I am aware of bank recovery agents dealing mercilessly with poor (or small) loan defaulters & above mentioned can be one out of thousand or lakhs incidents, but certainly it leaves a bad impact on society / area of operation. They dare to do similar activities with BIG guys.
Today Mr. Ghosh came on CNBC TV18 and clarified that Bandhan Bank has exposure of only 2-3% of the total book to the troubled districts of Assam. Hence I think stock started recovering after fall in price for last few days.
Article doesn’t give any clarity on what sort of loan and from how long they haven’t paid back the installments. I don’t think this is something uncommon from banks or NBFCs. Though taking roofing sheets is something beyond imagination.
Political connection behind this kind of organized protest. Mr. Ghosh admited in his statement. Bandhan is in news for its growth and profitable cash building ability. Political intention to grab easy money by blackmailing is not uncommon. Be ready for many such incident from this part of country.
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Pretty common in the rural areas. There are folks who don’t want to pay after sometime and would involve everyone including politicians. How come his son was at home while he could not be back on time. I am sure this is one sided story since bank will not discuss how this guy was avoiding recovery agents. I have heard cattle being taken away etc. ideal thing would be to avoid these kind of borrowers but the bank would slow down its growth too.
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The report is encouraging for Bandhan as it says that in terms of regional distribution of GLP, East and North-East accounts for 40 per cent (which happens to be core area for Bandhan, although they are planning to expand across other geographies, South 28 per cent, North 10 per cent, West 14 per cent and Central contributes 7 per cent.
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ET Awards 2019: Emerging Company of the Year award to Bandhan Bank
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