103678 Worldbank in INDIA
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THE 103678 WorldBank IN INDIA Public Disclosure Authorized VOL 14 / NO 2 SEPTEMBER 2015 Public Disclosure Authorized Public Disclosure Authorized I N S I D E Bandhan becomes India’s youngest Bank 1-5 Rising from the grassroots, Development Dialogue: A bank account for all 6-8 Bandhan, India’s largest ICR Update: Third National HIV/AIDS Control Project 9-10 microfinance institution, Recent Project Signings 11-12 is now a full-fledged bank New Additions to the Public Public Disclosure Authorized Information Center 13-23 hatakpukur, a lush village in rural West Bengal, is set amidst rolling Contact Information 24 Gpaddy fields studded with little ponds and groves of bananas and bamboo. Its gentle rhythm of life haven’t changed in centuries. The small community of ironsmiths in this village is famed locally for their handheld weighing scales. The scales are much in demand in this agrarian belt About the photograph: where fish, grains and vegetables are bought and sold at little roadside Women self help group members in Ghatakpukur haats or markets. With few other jobs in the village, the rising cost of raw village in rural West Bengal materials was hitting the ironsmiths hard and pushing their families deeper Photograph by Sona Thakur into poverty. first established in 2001, this Kolkata based microfinance institution (MFI), the largest in the country, has grown into a full-fledged bank. Last year Bandhan was one of only two applicants that were granted a banking license by the Reserve Bank of India. Bandhan Bank, which commenced banking operations from August 23, 2015, will focus on providing financial services to low income households, as well as micro and small enterprises and businesses. Bandhan secured the much-coveted banking license over 30 other institutions, including many mainstream players. The grant of the license recognizes the institution’s Until the wives of Ghatakpukur stepped in considerable contribution to improving to change their lives. Helped by Bandhan, financial inclusion across the country, as well India’s leading microfinance institution, and as its potential for making further inroads into now a full-fledged bank, they took small unbanked areas. loans to bolster their husband’s businesses and set up little enterprises of their own. “Access to formal financial services is In the process they transformed their lives. essential for reducing poverty,” said Onno Ruhl, World Bank Country Director in India. India’s youngest bank “We are proud to have partnered with Bandhan on its impressive journey rising Like many success stories, Bandhan up from the grassroots to become India’s started small. Now, 14 years after it was youngest bank.” Bandhan secured the much-coveted banking license over 30 other institutions, including many mainstream players 122 The World Bank in India • September 2015 Reaching India’s poorest Services Pvt. Ltd reached more than 6.5 million of India’s poorest borrowers, including borrowers women entrepreneurs, self-help groups and small businesses. While Bandhan’s network of A staggering one-third of the world’s over 2,000 branches is spread over 22 states population has no secure way to save money, and union territories, its major focus has been pay bills, or obtain a mortgage – almost a in India’s eastern and north eastern regions. quarter of them are in India. Since 2010, the World Bank has been working to address this gap by working with India’s leading Building new lives in rural microfinance institutions, one of which was India Bandhan. In Ghatakpukur, Krishna Das explains the Over the years, Bandhan’s reach has grown role Bandhan has played in transforming considerably. By 2015, Bandhan Financial their lives: “Our world expanded,” she said. Bandhan reaches more than 6.5 million of India’s poorest borrowers in over 22 states and union territories The World Bank in India • September 2015 123 With the six successive loans she took, her Shankari’s daughter now goes to primary husband’s business started to grow. The school and Anjana’s son, she says with pride, family’s income grew five-fold. Her daughter is studying to be an engineer. The weekly now goes to school and her toddler son is group meeting is also an opportunity to better fed. discuss other important issues like the care to be given to new mothers and their babies, the Used to running their households on tight children’s vaccination schedule, or household budgets, women like Das tend to bring sanitation. financial discipline to their borrowing. In the years of its existence, Bandhan has seen Today, all the ironsmiths’ workshops in a very high rate of repayment among its Ghatakpukur are busy. The children go to women borrowers. Namita, the cashier for school and the women are satisfied at the the women’s group in Ghatakpukur, explains little miracle they have wrought in their lives. that the concept of joint responsibility comes Moving forward, Bandhan’s transformation easily to women who were and remain into a universal bank will help in significantly friends. They unhesitatingly cover for each expanding the outreach of microfinance to other when someone is going through a borrowers in India’s low income states who financially rough patch, and in six years of its have little or no access to formal sources of existence, the group has not seen a single financing. women default on her loan repayment. A credit officer from Bandhan comes to collect Chandra Shekhar Ghosh, Bandhan Bank’s repayments every week and teach them the Chairman and Managing Director, said they plan to open around 500-600 branches basics of accounting and book-keeping. (Change background colour as needed) across the country, especially in the eastern With growing incomes, children’s education and north-eastern region to further support seems to be women’s top priority and that their current network of branches and is where they are investing. In Ghatakpukur, doorstep service centers. Bandhan’s transformation into a universal bank will help in significantly expanding its outreach in India’s low income states that have little or no access to formal sources of financing 124 The World Bank in India • September 2015 World Bank Group steps in with support at a critical juncture he World Bank Group has supported IFC has worked closely with Bandhan TBandhan through both the World Bank throughout the transformation process, bringing and the International Finance Corporation in its experience with other MFI-to-Bank (IFC). Since 2010, the World Bank’s Scaling transformations globally. Up Sustainable and Responsible Microfinance Project – implemented by the Small Industries Promoting responsible Development Bank of India (SIDBI) – has made microfinance important contributions to promoting responsible microfinance. Working through several MFIs, The World Bank project has helped improve including Bandhan, the Project reached more than data transparency, establish stronger grievance- 16 million clients, mostly in the low income states redressal systems, enhance systems for client of Bihar, Orissa, West Bengal, Rajasthan and north protection, establish a code of conduct for the eastern India. A substantial percentage of the sector, and substantially improve the use of credit MFI clients were poor women. market infrastructure. On data transparency, the main achievement has The Project has been the launch of a supported Bandhan in As home to one third of the world’s poor web-based data platform reaching over 280,000 living under $1.25 per day, India is key that will provide quarterly clients in underserved to achieving the global goal of ensuring operational data and states both through universal financial access by 2020 annual financial data on debt and early equity MFIs. investments that helped pave the way for other investors to enter SIDBI has supported Bandhan through both debt subsequently. and early equity investments that helped provide capital and opened the doors to other investors. In 2011, IFC came in with a US$ 29 million equity It has also helped Bandhan improve its already investment in Bandhan. This was the largest strong performance. private sector investment in the microfinance sector in India following the country’s microfinance Bandhan is a clear example of India’s long-lasting crisis. Since then, IFC has made further focus on financial inclusion. As home to one third investments in the institution. Today, IFC is one of of the world’s poor living under $1.25 per day, (Change background colour as needed) Bandhan’s largest institutional shareholders having India is key to achieving the global goal of ensuring made equity commitment of US$ 120 million universal financial access by 2020. The country is and sub debt of US$ 26 million to support the providing the appropriate level of leadership and institution’s transformation and expansion. innovative actions to achieve this goal. The World Bank in India • September 2015 125 Development Dialogue A bank account for all Access to a financial system can boost the creation of jobs, reduce inequalities in income, boost consumption, increase investments in education and help poor people cope with unexpected expenses or loss of income, says Onno Ruhl, World Bank’s Country Director for India and Gloria Grandolini, World Bank’s Senior Director for Finance and Markets Global Practice ow do you save money if you don’t have Now, financial inclusion has become a Ha bank account? And to whom do you prominent policy priority. Recently, Prime turn when you desperately need a loan? Most Minister Narendra Modi launched the people can’t imagine life without some kind Pradhan Mantri Jan Dhan Yojana (PMJDY), of financial services. But a staggering one- one of the world’s most ambitious initiatives third of the world’s population has no secure to promote financial inclusion. The program way to save money, pay bills, take a loan or is off to a good start—within six months, obtain a mortgage.