Bandhan Bank cut its microfinance reliance and lifted secured loans to 57% (interview)
In an interview, Bandhan's CFO says the bank is moving from near-80% microfinance to a 60:40 secured mix, selling ₹3,200 crore of bad loans along the way.
What was changed
In a March 2026 interview with ETBFSI, Bandhan Bank CFO Rajeev Mantri says that before the pandemic the bank had almost 80 per cent of its portfolio in microfinance, a very large unsecured exposure. By March 2024 about 42 per cent of the book was secured. He says the shift since then has been led mainly by housing, retail assets and wholesale banking, reaching almost 57 per cent secured by December 2025.
The microfinance (EEB) share fell from 42.5 per cent in December 2024 to 34.5 per cent in December 2025. The target is roughly a 60:40 secured-unsecured mix, with microfinance settling at around 30 to 33 per cent of the book over the next one to three years. Wholesale banking is about 31 per cent of advances, and the bank has started lending to large corporates such as Tata and JSW with limited ticket sizes.
On asset quality, Mantri says industry microfinance shrank almost 16 per cent between December 2024 and December 2025 against about 10 per cent at Bandhan, credit cost rose to almost 4.1 per cent, and the bank sold about ₹3,200 crore of NPAs to an asset reconstruction company in Q3 FY26, bringing credit cost down to almost 3.3 per cent. He expects 1.6 to 1.7 per cent by the end of FY27.
Why it worked
An overleveraged microfinance industry raised credit costs, and an unsecured-heavy book left the bank exposed to that cycle.
Housing, retail and wholesale lending offered secured growth with lower expected credit cost, around 1 per cent against about 3 per cent for microfinance.
Selling stressed loans to an asset reconstruction company cleaned the book faster than waiting for recoveries.
What can be applied
A lender built on one unsecured product can only de-risk by building secured lines, selling the worst loans and accepting several quarters of higher credit costs.
Aftermath
The numbers are the CFO's and the 60:40 mix and the credit-cost fall to 1.6-1.7% are still targets. Net interest margin was 5.9% in Q3 FY26, with a goal of 6.4-6.5% by FY27 exit as deposits reprice.