Book Review: Bandhan-The Making of a Bank

Bandhan-The Making of a Bank by Tamal Badyopadhyay is the kind of book that you read and marvel at the wonder that is Indian entrepreneurship.

It chronicles the unusual story of an entrepreneur of Bengal of extremely humble origins striking gold by serving the banking needs of the poor.

As the author puts it,Bengal is not known for its entrepreneurship-entrepreneurship in Bengal is confined largely to running chowmein and momo stalls !

The founder of Bandhan Bank,Chandra Shekhar Ghosh, came from a family of very humble origins.

In his initial years, he was so financially constrained that even buying eggs for his young toddler son was beyond his reach.That such a person could rise above his circumstances and build a world-class organization is a testimony to his hard work,determination,vision and ingenuity.

The book narrates how Bandhan started-by giving loans of 1000 Rs  to SHG of women ! It is a marvelous story how branch by branch,member by member, Bandhan rose to become the largest MFI in India and eventually get a Universal Banking License

The author,with his vast experience, does a good job of explaining how the MFI industry works,its differences with the banking sector and so on.

One insight I found useful was a run on the bank usually means depositors coming all at once to take back their money whereas a run on a MFI means the borrowers ganging up together to refuse to pay back their loans !

The book has a chapter each on Vijay Mahajan of Basix and Vikram Akula of SKS Microfinance. It chronicles their rise and fall and illustrates in stark relief the political risk that MFIs face in India.

The Book also explains the challenges facing Bandhan as it moves ahead and its unique proposition-unlike other banks which borrow from the middle class/poor and lend to the rich/corporates, it intends to borrow from the middle class/rich and lend to the poor !

A wonderful book and a must-read for investors in the Indian banking sector.

 

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