Tuesday, June 17, 2014

Chidambram's Politically Motivated Mahila Bank Incurs Loss

Bharatiya Mahila Bank preparing to post losses this fiscal-Economic Times
KOLKATA: Bharatiya Mahila Bank is preparing to post losses this fiscal, its first full year of
operations, as it pays more than the market average on savings deposits and  offers concessions in lending rates to fulfil its social mandate.

The  bank, incorporated under the Companies Act last August, offers 5% for deposits
of Rs 1 lakh and above and 4.5% for the rest. This is more than the savings bank  rate offered by any other public sector bank or by ICICI Bank, the largest among private players. "We don't mind having some losses initially," said its chairman  and managing director, Usha Ananthasubramanian. "We need to be a differentiator  and create an identity first."

The bank, which started with a seed  capital of Rs 1,000 crore, was the UPA government's showcase project aimed at  economic empowerment of women. The wholly-owned government entity has
designed several women-centric  products with a concession in the lending rate to encourage them to take  up economic activities. It's targeting a business of Rs 1,800 crore this  fiscal. The deposit target is fixed at Rs 1,000 crore and advances at Rs 800  crore. In the first four-and-half months of operation in the last fiscal, the  bank's business was Rs 175 crore with almost equal contribution from deposits
and advances.

Ananthasubramanian said the bank plans to open 57  branches this year to add to its current tally of 23. Former finance minister P  Chidambaram had indicated that the bank would open overseas offices.

However, Ananthasubramanian  said it was premature to talk about it. The bank may not look at raising capital  immediately, she added. Bharatiya Mahila Bank, which received a banking permit
in September last year, is guided by the Reserve Bank of India's banking rules.


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