Bandhan Bank has reduced its interest rates on micro loans from 20.5% to 19.9%, effectively, a 0.6% reduction. This was the third consecutive reduction since the micro financial institution started its operation as a Universal Bank in August 2015.
The first reduction came up immediately after the transformation, when the micro lending interest rate was slashed by 1.4% or 140 bps (basis points). The next round of cuts happened in April 2016, when the interest rate was brought down to 20.5% from 21%. With the latest decrease of 0.6%, Bandhan Bank has managed to reduce its micro loan rate by a total of 2.5% or 250 basis points in less than 11 months of its operation as a universal bank.
The bank’s chairman and managing director, Chandra Shekhar Chauhan said that Bandhan’s transformation into a bank from a micro financial institution has reduced the cost of funds. This has enabled them to afford lower interest rates. So according to him, this decision will have a favorable cost impact on the bank and will also benefit the micro and small scale industry in reducing their financial burden.
The Kolkata headquartered Bandhan Bank has mobilized close to Rs 15,000 crore in deposits since its launch. It current network spread across 29 states and 7 union territories comprises 688 branches, 237 ATMs, and 2022 doorstep service centers. Its current customer strength of 8.77 million people is being served by a staff of 21,000 employees. The bank offers 6% interest rates on savings accounts on deposits above Rs 1 lakh, and 4.25% for amounts less than or equal to Rs. 1 lakh. However, the maximum interest rate offered by Bandhan Bank on term deposits of 1 to 3 years is 8.25% which is increased to 8.75% in case of senior citizens.