Whalesbook
Bandhan Bank is opening a new corporate lending branch in Mumbai’s Bandra Kurla Complex to grow its wholesale banking portfolio. Currently, its wholesale book stands at Rs 48,450 crore, making up about 31.4% of total loans. The bank is targeting a business mix of 35% microfinance and 65% secured lending to reduce risk. Alongside this shift, the lender plans to sell Rs 360 crore of bad loans to clean up its balance sheet. Investors are watching how this transition to a more balanced loan portfolio impacts long-term credit quality.
What Happened
Bandhan Bank is taking a significant step to grow its corporate banking business by opening a specialized branch in Mumbai’s Bandra Kurla Complex, a major financial center. This expansion is part of a deliberate strategy to increase the bank's wholesale banking activities. As of March 2026, the bank's wholesale loan portfolio has reached Rs 48,450 crore, which accounts for 31.4% of its entire loan book. The bank has set a long-term goal for its business mix: roughly 35% in microfinance and 65% in secured lending. To support these changes, the bank is also looking to bolster its funding by offering Foreign Currency Non-Resident (FCNR) deposits with interest rates around 7%.
Why This Matters For Investors
For years, Bandhan Bank has been known primarily for its strong footprint in the microfinance sector. While microfinance can offer higher interest margins, it is also sensitive to economic downturns and localized shocks. By pushing for a 65% share in secured lending, the bank is trying to lower its overall risk profile. Moving into corporate lending allows the bank to tap into larger, more stable accounts. However, this is a competitive segment. The success of this move will depend on whether the bank can maintain healthy profit margins while effectively managing the risks associated with larger corporate borrowers.
The Cleanup Strategy
Alongside its growth plans, the bank is addressing its existing asset quality. It has announced plans to sell non-performing assets (NPAs), or bad loans, worth approximately Rs 360 crore during the current financial year. Selling bad loans is a common strategy used by banks to clear their balance sheets, recover some capital, and reduce the burden of managing stressed accounts. This provides a cleaner balance sheet, which is a positive signal for investors as it can improve the bank's overall financial health and free up resources for new, higher-quality loans.
The Funding Challenge
Expanding the loan book requires a steady supply of low-cost funds. The bank’s move to attract FCNR deposits with competitive rates suggests it is actively trying to strengthen its liability franchise. In banking, if a lender grows its loan book faster than its deposit base, it can face liquidity pressure. By reaching out for overseas deposits, the bank is aiming to diversify its funding sources, which can help stabilize the cost of funds and support the growth of the wholesale segment.
What Could Go Wrong
Transitioning from a microfinance-heavy model to a balanced corporate and retail model is a complex task. Corporate lending carries different risks than microfinance. Large corporate accounts can be lumpy, meaning if one or two large loans go bad, it can significantly affect the bank's asset quality. Furthermore, the corporate lending space is crowded with larger, well-established public and private sector banks. Bandhan Bank will need to compete on interest rates and service quality, which could put pressure on its net interest margins (NIM) in the short term. Execution is key, and investors will look to see if the bank can scale this segment without compromising on its risk assessment standards.
What Investors Should Track
Moving forward, the key monitorables will be the composition of the loan book and the bank’s asset quality ratios. Investors may track the quarterly updates to see if the proportion of secured lending is moving toward the stated 65% target. Additionally, the progress of the planned NPA sale will be crucial to see if it successfully leads to improved asset quality metrics. Finally, management commentary regarding the net interest margin and the cost of funds will provide insight into how successfully the bank is balancing growth with profitability.