Take actions against multiple lenders: Ghosh

Kathmandu, Mar. 9:

Founder of the Bandhan Bank, the largest microfinance bank in India, Chandra Shekhar Ghosh Thursday suggested that the Nepalese microfinance institutions (MFIs) should promote the use of cheques while lending and they should discourage the banks from lending to the customers who have already obtained loans from two MFIs as a remedy to multiple lending.

“Take disciplinary actions against the third bank that lend money to the customers. Make a due, diligence study of the customers and enhance the credit on the basis of cycle of loans and repayments,” suggested Ghosh while speaking at an interaction with the Nepali bankers in the capital.

One customer can’t borrow from more than two microfinance institutions in India, he informed.

He said that there should be strong regulatory provisions to ensure that the MFIs work according to the norms of microfinance and serve to the deprived sector.

The managing director and chief executive officer of the company, that has 2,022 branches in India, urged the microfinance bankers in Nepal to come together to diagnose the problems in the sector and find out solutions.

“Apply PHD (patience, hard work and dedication) formula in microfinance management. Don’t seek outright profits, train your employees well and earn the confidence of customers,” he shared his success mantra with the participants.

According to Ghosh, primary concerns should be given to the capacity enhancement of the staff as MFIs has different cultural values than commercial banks.

“The staff play main role in the success of any company. Therefore, we have eight training centres across the country where about 2000 people are being trained in a month on an average,” said the president designate of the Bengal Chamber of Commerce and Industry (BCCI).

He is also the chairman of Economic Affairs, Finance and Taxation Committee at the Confederation of Indian Industry.

Gosh’s second priority is the customer.

He suggested, “Pay utmost attention to the customer. We are working for different segment of people who are poor and deprived so our working style should suit those section of population.”

President of the Nepal Bankers’ Association and CEO of Mega Bank Anil Keshari Shah said that there were intrinsic advantages in every step of economic pyramid.

“If you serve all segments in a pyramid structure, you are well insulated from many risks. It helps you in mitigating various risks,” he said while giving emphasis that the banks in Nepal had been trying to reach the deprived sector as well.

Shankar Man Shrestha, chairman of the Centre for Self-help Development (CSD), organiser of the event, urged the MFIs to be a responsible microfinance bank that should not always focus on the profits and share prices.

“Many malpractices are the results of the hunger of the profits of the CEOs and management of the MFIs. Multiple lending to a same customer is the byproduct of that hunger,” he said.

Founded in 2001, the Bandhan received the license for the microfinance bank in June 2015.

Currently, the Bandhan Bank operates across 33 Indian states and Union Territories catering to more than 10 million customers of which about 7 million are women borrowers.

It has a workforce of about 23,750 employees.

Since its launch the bank has collected deposits more than INR 208 billion and has outstanding loan book of INR 212 billion, said Ghosh.