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We would like to address the recent developments at Bandhan Bank, specifically the resignation of the Managing Director Mr. Chandra Shekhar Ghosh, which has raised concerns given the context of the past year's executive resignations, including the CFO and Chief Compliance Officer. Understandably, these events may have caused some apprehension about our investment rationale for Bandhan Bank.
The resignation of the MD indeed presents a challenging scenario for Bandhan Bank. These departures, particularly of Mr. Ghosh, the bank's founder who has been a pivotal figure in the making of the Bank, are significant. At 64, Mr. Ghosh's age is a factor that might influence regulatory decisions regarding top executive appointments, as per Reserve Bank of India (RBI) norms.
The ongoing audit by the National Credit Guarantee Trustee Company (NCGTC) concerning the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFMU) loan claims adds a layer of scrutiny to Bandhan Bank's operations. The outcome of this audit is pending and could impact the bank's financial health. The asset quality issues that surfaced during the COVID-19 pandemic persist, adding to the bank's challenges.
It is crucial to note that Mr. Ghosh is not exiting the group entirely. His continued presence within the group structure could provide some continuity, though not in the same capacity. The bank might consider bringing in an external candidate for the MD & CEO position, which could introduce fresh perspectives but also comes with transition risks.
The positions of CFO and CCO (Chief Compliance Officer) have been effectively filled by Rajeev Mantri and Amitava Goswami, respectively. Rajeev Mantri, with over 25 years of experience in banking and finance and former roles as CFO of Citi India and TransUnion CIBIL, takes on the CFO role. Amitava Goswami, bringing more than 30 years of banking experience and having served as the Head of Branch Operations and Customer Service for over 8 years before transitioning to the new role of CCO.
Despite these challenges, we note some positive trends in the bank's performance metrics. Performance updates for Q4 showed a sizeable increase in both loans and deposits. The bank saw a boost in its deposit base with a 12.1% QoQ increase in retail deposits, and a 21.9% YoY growth. Loans and Advances saw a growth of 10.9% QoQ and 17.8% YoY. The CASA deposits saw an uptick of 18.2% QoQ and 18.1% YoY.
Disclosure: MoneyWorks4me's employees may have exposure in the securities mentioned in the above report. For detailed disclosure click here.
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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