Analysing the Sustainability of Private Institutions Contributing towards Financial Inclusion: The Case Study of Bandhan Bank

Abstract

Poverty is the prime factor for Indias backwardness. In order to eliminate poverty, unemployment needs to be minimised for achieving economic growth and development. Various studies have revealed that participating in the financial system, people get access to credit which helps them start their own businesses and contribute to the greater good of the society thereby reducing income inequality and accelerating economic growth. Financial inclusion starts with having a bank account at first. The 2014 Global Financial Inclusion database states that 21% of the worlds and two-thirds of the South Asias unbanked population resides in India. Therefore, India needs increased penetration of banks into the unbanked areas. The micro-finance sector serves the disadvantaged section of the society in these areas with short term credit, where Bandhan Financial Services Private Limited has achieved success with 0.1% non-performing assets (NPA). But, sustainable development requires better financial services, i.e. credit, deposits, remittances and insurance which only a bank can give. To extend the geographical extent of banks, Reserve Bank of India (RBI) had granted in principle approval to two applicants of banking license on 2nd April, 2014 which was valid for 18 months, following which in 2015 India witnessed the birth of two new banks, one being the Bandhan Bank. This paper aims to study the sustainability of Bandhan Bank which aims at working towards inclusive growth after achieving success as a micro-finance institution (MFI).

Keywords: Financial Inclusion, Microfinance, Bandhan Bank, Sustainability

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