Bandhan, the largest microfinance institution in India, has 13,000 staff members and 2,016 branches in 22 states and union territories, 5.2 million borrowers and loans outstanding of INR 57.04 billion. However, its overdependence on external sources of funds along with recent steps by the country’s banking regulator have started worrying Bandhan’s management, from a profitability and sustainability perspective. The banking licence policy declared by India’s central bank in February 2013 came as an opportunity for Bandhan to resolve the predicament it had met. The founder chairman and managing director is now trying to address the question of transforming Bandhan into a bank. Does the present business require any change? As a bank, the cost of funds for Bandhan would come down, as it would be able to raise funds by drawing deposits from clients. But is Bandhan ready to become a bank? How will it meet the various challenges in achieving business transformation?

Bandhan, the largest microfinance institution in India, has 13,000 staff members and 2,016 branches in 22 states and union territories, 5.2 million borrowers and loans outstanding of INR 57.04 billion. However, its overdependence on external sources of funds along with recent steps by the country's banking regulator have started worrying Bandhan's management, from a profitability and sustainability perspective. The banking licence policy declared by India's central bank in February 2013 came as an opportunity for Bandhan to resolve the predicament it had met. The founder chairman and managing director is now trying to address the question of transforming Bandhan into a bank. Does the present business require any change? As a bank, the cost of funds for Bandhan would come down, as it would be able to raise funds by drawing deposits from clients. But is Bandhan ready to become a bank? How will it meet the various challenges in achieving business transformation?