BANDHAN: Commercializing a Social Cause

In February 2013, after a gap of ten years, the Reserve Bank of India (RBI) invited applications for the grant of new banking licenses in India . There were twenty-six applicants that included some highly reputed corporate houses of India. One of the applicants was Bandhan Financial Services Pvt. Ltd. (Bandhan), a major microfinance institution in India that had caught everyone’s eye for offering financial services to the bottom of the pyramid.

An underdog amongst the big names such as the Aditya Birla group , Bajaj group , and several others, few were rooting for Bandhan, considering the wide chasm between banking and microfinance. Critics questioned how Bandhan, an institution with a social motive, and one widely known for giving small collateral free loans, would transform itself into a full-fledged bank with a profit motive. Also, they pointed out that Bandhan’s philosophy and values would be put to the test as it transformed into a banking entity.....