Institute of micro-finance and cooperative development.

Learning from our neighbor: Exposure Visit to Bandhan Bank Ltd., India

Learning gives creativity, Creativity leads to thinking, Thinking provides knowledge, Knowledge makes you great’ – APJ Abdul Kalam

Kick starting the year 2017, the Centre for Self-help Development (CSD) organized the first exposure visit to our neighboring country, India, to observe the operations of Bandhan Bank Ltd. which originated in the cultural hub of West Bengal. Ninetop microfinance practitioners representing the eastern, central and mid-western development regions of Nepal were a part of the program which took place from January 9 – 16, 2017 and spanned across Siliguri, Sikkim and Kolkata.

Starting out as an NGO with just three staff in 2001, the organization was setup to serve the dual purpose of poverty alleviation and women empowerment. Over the years it has grown and strengthened its position and is now a national level bank, receiving license from the Reserve Bank of India (the Central Bank) in 2015.

In order to learn from the Bandhan experience, the team, led by the Chairman of CSD, Mr. Shankar Man Shrestha started out by observing the field activities in New Jalpaiguri and Siliguri, West Bengal and in Gangtok, Sikkim. During the field visits, it was refreshing to observe that the essence of microfinance was not lost among the staff and the clients of Bandhan, despite over a decade of operation. The Micro Banking Officers (field staff) were as enthusiastic and dedicated to their work and their members alike with each MBO facilitating 4-5 center meetings a day.

The average group size comprised of 30 – 40 members with no single drop out till date. The reason behind the no drop out was the fact that Bandhan has been able to go to the real poor and ultra-poor communities and women to provide their services. As such, the members have been able to slowly graduate, step-by-step, and has no unproductive consumption. Groups of centers comes under the Doorstep Service Centre (DSC) which is Nepal’s equivalent of Branch Offices.

Loan and savings products are kept simple and designed according to the needs of the members. Bandhan aims to introduce technology to its member gradually and in a simple manner. As a bank, the members are issued a debit cum ATM card and every financial transaction is processed using the Point of Sale (POS) machine. The POS machine created much interest among the visiting team members. Passbooks of the members are updated by the software latest by every three months.

Interactions with the enterprising women members in both New Jalpaiguri and Gangtok clearly indicated that the members were extremely satisfied with the services of Bandhan and had no urge to go to other MFIs. They understood the reason behind weekly center meetings and have unanimously accepted it noting that it was for their benefit. They were content with the loan they were receiving and had made effective utilization of loan in various business activities. Appreciating Bandhan’s endeavor to adhere to the basic principles of microfinance, Ms. Bimala Yogi said, “If the organization continues to follow the basics of microfinance, it can attain great success and respect in the community, as seen in Bandhan’s case. We have deviated from the mission of microfinance and that is why we are facing the current challenges in the sector.”

An impressivesystem of accountability is kept alive by the necessity of project verification by the DSC Head prior to every loan disbursement. The DSC Head observes 2 center meetings per day, makes household visits, monitors projects (surprise visits), and supervises loan disbursements and so forth. As noted by Mr. KiranTharu of UNYC Nepal, “Appropriate loan size despite huge market is what is keeping the sector in check. Moreover, responsible monitoring and the high level of staff motivation and responsibility is noteworthy. From the top to the bottom, everyone shares the same voice.”

At the DSC office and the branch office, the team was involved in discussions and experience sharing with the staff.

As said by Ms. Shova Bajracharya of Manushi, “The Credit Bureau Report is taken very seriously among the MFIs in India, where loan tracking is done before disbursement. As per the rule, no member is allowed to take loan from more than two MFIs and cannot exceed a total loan limit of INR. 1 lakh. We must learn from this and make ours more effective and binding.”

The team also visited the Learning Center in Siliguri, where the Branch Officers were in session. Bandhan makes huge investments in the training and capacity building of their staff. As mentioned by Mr. Mani Kumar Arjyal, CEO of Nerude Laghubitta Bikas Bank Ltd., “I’m impressed with how Bandhan has been able to recruit and train their staff from the bottom up. They have been able to make gradual promotion of their staff from the field level and retention rate is very high. The staff is energetic and motivated right from the field to the head office level.”

The eight day program ended with an experience sharing with the top management of Bandhan at their head office in Kolkata. The team had the opportunity to meet and exchange experiences with the Founder of Bandhan, Mr. Chandra Shekhar Ghosh.

The Chairman & Managing Director shared his journey thus far, saying, “Bandhan is a unique banking model. We are created on trust. It is important to gain the trust of your people, the members, the community and the non-members as well. One must have a big vision and not be afraid to dream big. Our journey hasn’t been an easy one, but we believed in what we do and the services we provide to the marginalized. Keeping in view of our best microfinance practices, the RBI issued our license in 2015. The RBI provided only two banking license in the last ten years and Bandhan is the first organization in 67 years to receive the license from the Eastern part of India. We are the 4th largest bank in India in terms of customers and service. We arecurrently reaching almost 10 million customers and are serving them through our 768 bank branches and 2,400 DSCs.Our strong screening process has been an asset for the organization and we try to simplify everything so that our members can also be a part of the process.” Responding to a question regarding over indebtedness put forth by Mr. Uday Raj Khatiwada of Swarojgar Laghubitta Bikas Bank Ltd., Mr. Ghosh said, “Over indebtedness has never been a problem for us. Our strong screening process, our following of the data provided by the Credit Information Bureau and our strong relation with our customers has been our forte and we had not had to face such an adverse situation thus far.”

Impressed by the simplicity, low profile and team building approach of the management team, Mr. Rajendra Bahadur Pradhan of SOLVE Nepal said, “There is excellent communication from the top to bottom of the team. The staff discipline on the one hand is highly appreciable and on the other hand Bandhan’s effort in giving opportunities to their staff to develop cannot go unnoticed.”

Summing up the exposure visit to India, Mr. Shankar Man Shrestha said, “We need to develop solidarity in Nepalese microfinance. Sharing of credit information and abiding by the regulations laid down will be in the benefit of all stakeholders. Winning the confidence of the community, law makers and district officers is important to raise awareness of the work we are doing. We must not deviate from our mission. Falling into the false complacency will diminish what we set out to achieve. The main person to steer the organization in the right direction is the CEO. Unless the person is active, motivated, disciplined, dynamic and determined and with a vision, the organization cannot move forward. S/he is like a boatman, who makes their way through the waves and currents.”

“The staff is highly motivated and loyal to the organization and treats it as their own. Moreover, the relation between the field staff and the members is very good, and it should remain this way as they are the field ambassadors of the organization. Bandhan has continued to adhere to the principles of microfinance and hence has been able to achieve much accolades. Mr. Ghosh’s presence has been a source of inspiration and motivation to us all, and we must not let this enthusiasm die out,” said Mr. Shrestha.

“I’m eager to replicate the Bandhan model in our cooperative as well. Their vision, operating system and staff capacity are their strengths. They have kept everything simple and basic and yet their staff and members are highly motivated,” said Mr. Mahendra Kumar Giri.

Sahara Nepal SACCOS, Jhapa; Nerude Laghubitta Bikas Bank Ltd., Morang; Mahuli Samudayik Laghubitta Bittiya Sanstha Ltd., Saptari; SOLVE Nepal, Dhankuta; Swarojgar Laghubitta Bikas Bank Ltd., Kavre; Manushi, Kathmandu; UNYC Nepal, Bardiya and Nepal Women Community Service Center, Dang were a part of the visit.

Mr. Shyam Kant Chaudhary said, “We overlooked our neighbor in the search for learning from others. We were wrong. There is much to learn from Bandhan and India. We are returning with a bag full of memories and learnings which we can easily implement in our own sector.”

The team was highly appreciative of CSD’s initiative of the Exposure Visit and has recommended the management to conduct a second visit for those who missed out. The program was coordinated by Senior Officer of CSD, Ms. Stephaniema Rana.