\u201cI used to consider myself quite wealthy when I saw families starving for days and eating mashed potatoes after selling advance labour for 15 taka when the rate of daily wage was 75 taka,\u201d he told me on a flight from Kolkata to Delhi.<\/p>\n
The BRAC concept was to make these people aware of their rights and let them decide what they wanted to do. While there was an outreach programme meant for that, there was another project to give them training and microcredit. At some point, the two different programmes got merged into one rural development programme.<\/p>\n
Working with BRAC, Ghosh experienced poverty in its starkest form, and power structure in a village. That helped him a great deal to pick up skills to motivate people, analyse human behaviour and resolve conflicts. He also learnt patience and humility. As a university student, he was quite hot-headed and impatient, but looking at abject poverty he often asked himself how he could get angry at these people.<\/p>\n
The BRAC assignment also taught him that human capital cannot be built without training; education without discipline is meaningless. The most critical piece of learning which helped him a great deal to create Bandhan was that poor people don\u2019t care much about money if it\u2019s given free.<\/p>\n
Only when they are charged for the money do they deploy it, earn on it and pay back. From a programme organizer, he was promoted to the position of a manager and, finally, a faculty member giving training to MFIs across Bangladesh.<\/p>\n
By the time he left BRAC in 1997, his salary was 10,000 taka.<\/p>\n
His return to Kolkata followed his marriage with Nilima, whom he fondly calls Nili. To Nilima, he is \u201cSir\u201d in the presence of others but \u201cShurid\u201d (meaning friend) in private.<\/p>\n
Sixth of eight children (five sisters and three brothers), Nilima comes from a wealthy family in Bishalgarh, Agartala, Tripura. Her father, Haridas Ghosh, was a transport operator who also owned a hardware shop.<\/p>\n
In 1985, the year Ghosh completed his post-graduation from Dhaka University, his brother, Vaskar, met Nilima\u2019s elder sister, Poornima, as a prospective bride for his elder brother. But Vaskar liked Nilima more than Poornima. Much later, in 1993, once again Vaskar dropped in at Nilima\u2019s five-storeyed massive house in Tripura, bride-hunting for his elder brother. This time, Ghosh and a few of his friends were in tow. By that time, Poornima had already got married and Nilima was doing her graduation.<\/p>\n
Nilima entertained them by singing a Rabindra Sangeet: Chokher aloy aly dekhechilem choker bahire<\/i><\/p>\n
Roughly translated, it means:<\/p>\n
The world I had seen,<\/i><\/p>\n
A world of images, was outside.<\/i><\/p>\n
Now, as darkness draws a screen,<\/i><\/p>\n
I turn to my heart for a vision.<\/i><\/p>\n
When her mother asked Nilima whether she liked Ghosh\u2014a tall, dark and handsome young man\u2014Nilima made it clear that she found him \u201cuncultured\u201d as he kept mum while his friends were doing all the talking. When the two of them were left alone in a room, Ghosh confided in her that he was running a high fever and was in no position to talk.<\/p>\n
Nilima gave her nod for the marriage, but on one condition\u2014that she must be allowed to complete her post-graduation.<\/p>\n
When they got married in August 1993, Ghosh remained in Dhaka working for BRAC and Nilima in another part of Bangladesh, doing her MA in public administration from Chittagong University. Only after she completed her studies in 1996 did both come back to West Bengal, and their son, Angshuman, was born the following year.<\/p>\n
Ghosh had been feeling uncomfortable in Bangladesh\u2014there was social unrest, and attacks on the minorities. But life was not smooth in West Bengal either. Income from the knitting factory that he was running with his brother, Vaskar, was not sufficient to support the family. Also, there was frequent labour trouble in the Left-ruled state which was not exactly known for its work culture. He also did not find professionalism among NGOs; they were not willing to scale up the business of small loans.<\/p>\n
He was a restless soul doing many things to manage a living, roaming around networking with people and doing the ground work for the birth of Bandhan. Occasionally, he was seen crying in the puja room of his uncle Manoranjan Ghosh\u2019s residence at Konnagar, where the couple was staying. He often told Nili that he was always praying to God not to give them another child as he would not be able to financially support another member in his family.<\/p>\n
A fairy tale<\/h2>\n
What followed next seemed like a fairy tale. Bandhan was registered as a trust in April 2001, and the next year it opened two branches, at Bagnan and Konnagar, to start its microfinance operations. By 2014, when it got the in-principle approval from India\u2019s banking regulator to set up a bank, it had 2,022 branches across twenty-two Indian states, and at least 14,000 people on its roll. There were 6.7 million borrowers. Many large corporations as well as established financial intermediaries were among the twenty-five entities that had applied for a banking licence, but only two could make it. Bandhan was one of them.<\/p>\n
How did he build this empire?<\/p>\n
Those who know him well say he is modest. Underneath his apparent naivety, there is a wise and even wily man. He is a man with uncommon common sense. \u201cHe looks very simple, but he is very sharp. People often misjudge his wisdom by looking at his simple exterior and he uses this to his advantage,\u201d says Brij Mohan of SIDBI. A central banker who met Ghosh at the RBI office in Kolkata (it was \u201clove at first sight\u201d) was completely taken in by his simplicity. \u201cHe lacks articulation but knows the language of the poor. He could instantly strike a chord as he has enormous empathy for them,\u201d says this gentleman who does not want to be identified, as he is a regulator.<\/p>\n
Another central banker who had also worked in RBI\u2019s Kolkata office claims to have not done anything for Ghosh except for introducing him to others at various functions as \u201che did not know his way\u201d. Ghosh has brilliantly built on those introductions. This person too has reservations about being identified. \u201cEverybody talks about poverty alleviation through MFIs but very few people know this like Chandra Shekhar… He understands what is poverty; what the borrowers need and how much they can pay back. He would not give them one penny extra to ensure that no money is wasted and every rupee is paid back.\u201d<\/p>\n
![\"A](\"http:\/\/www.livemint.com\/r\/LiveMint\/Period2\/2016\/06\/13\/Photos\/Processed\/gho-knAC--621x414@LiveMint.JPG\" "\\"A")
<\/div>\nA file photo of Chandra Shekhar Ghosh from 2010. Photo: Indranil Bhoumik\/Mint<\/p>\n
To illustrate the success of Ghosh, this central banker refers to the Differential Rate of Interest (DRI) scheme that was introduced by the government in March 1972. Under this scheme, in 2009, a borrower whose annual family income from all sources did not exceed Rs.<\/span>18,000 in a rural area, and Rs.<\/span>24,000 in urban and semi-urban areas, and land holding did not exceed one acre of irrigated land or 2.5 acres of non-irrigated land, was eligible for Rs.<\/span>20,000 of housing loans and Rs.<\/span>15,000 of other loans at 4% interest rate.<\/p>\n No collateral was required for such loans and repayment was to be done in five years, including a moratorium period.<\/p>\n The overall target for loans given under the DRI scheme for the banking system was 1% of the total advances of the previous year, but most could not meet the target as they found no takers. On the other hand, in Bandhan\u2019s early days, it gave loans as small as Rs.<\/span>1000.<\/p>\n Ghosh used to keep RBI executives even remotely connected with rural credit informed of every step he was taking, even though he was not required to do so. He would send a monthly progress report to all of them, even though they might not read those and gave feedback only occasionally.<\/p>\n This illustrates his extreme sincerity, clarity of purpose and uncanny knack for building relationships with everybody who matters. Indeed, he is very much a relationship man. ASA International\u2019s Haque told me that every time his team came to Kolkata, Ghosh called them home for dinner and served simple, home-cooked food, thereby forging stronger ties.<\/p>\n Saneesh Singh of SIDBI, who played a key role in Bandhan getting its first loan from the development finance organization, is also hugely impressed with Ghosh, whom he found was \u201cextremely receptive to ideas\u201d. \u201cHe is very innovative and hard-working. He has a very strong rustic common sense and is street smart. He is always at the right place at the right time, meeting the right people and willing to explore ideas. He is an entrepreneur who is willing to take risks,\u201d Singh said.<\/p>\n One thing, however, Singh could not understand\u2014why Ghosh was resisting technology. \u201cHe was happy with the manual operations of Bandhan.\u201d<\/p>\n Initially, Ghosh was guarded, but later they became friends and both used to discuss the vast financial needs of the poor in the hinterland and the enormous possibilities. Once, Ghosh brought some chocolates for Singh at the SIDBI office in Kolkata from one of his overseas trips, but Singh politely declined to accept them. From that day onwards, more intimacy developed between the two and Chandra Shekhar became \u201cShekhar\u201d for Singh. \u201cWe were buddies though I could not put my arms around him because of the institutional framework between us,\u201d Singh said.<\/p>\n Y.C. Nanda of NABARD (National Bank for Agriculture and Rural Development), who had been on the board of BFSL, the non-banking finance company which got the banking licence, since 2008, says, \u201cInitially, I would advise him frequently, tell him what BFSL should do, and he would listen to me quietly and would never argue. But I stopped advising him after I found he knew much more than I did. His assessment and judgment were far superior to mine.\u201d<\/p>\n \u201cI had only managed NABARD, but he has created an institution. For me, it was easy to manage a strong, very well-established institution, but creating an entirely new organization of this size is a great achievement. I would say Bandhan is entirely Chandra Shekhar\u2019s creation. The board\u2019s contribution is that it did not stop him from doing what he wanted to do; it did not interfere too much. That\u2019s the only credit the board should get.\u201d<\/p>\n Ghosh has the uncanny ability to see things differently.<\/p>\n When the logistics and premises team of Bandhan Bank was finding it difficult to close the property deals for the Kolkata branches\u2014and only eighteen of thirty-five locations were finalized\u2014he asked the team why they were so slow.<\/p>\n One of them pointed out that the rentals were an issue. With particular reference to one branch at Kankurgachi in north-central Kolkata, he said, \u201cSir, it\u2019s a question of who will blink first. The Gupta Brothers [a restaurant chain] is offering Rs.<\/span>190 [per sq. ft] but the landlord likes a bank as a tenant.\u201d<\/p>\n Ghosh\u2019s curt answer was, \u2018I like the bank but that does not mean I don\u2019t like money… Pay more than Gupta Brothers and take that premise.\u2019<\/p>\n In some sense, Ghosh\u2019s management style is disruptive. At least one senior banker who has joined Bandhan recently finds him a \u201cbenevolent dictator\u201d. He does not believe in hierarchy and that often creates parallel management. He reaches out to employees of almost every level. He gives them direct access, and this keeps the information flow continuous, something which he had learnt at BRAC.<\/p>\n He does not believe in allowing people to do their jobs without any supervision, particularly when they are dealing with money. \u201cPoor people dealing with money always tend to deviate and hence they should be kept under strict supervision,\u201d has been his management mantra while building<\/p>\n Runu da does not see this as a negative point. According to him, \u201cCMD-Sir is always with people. He has direct contact and loves to hear from them. He knows where they are lacking and how to nurse them and cover up their weak points; he recognizes people\u2019s worth; he always thinks of how to develop employees\u2019 futures.\u201d<\/p>\n Ghosh\u2019s style of micromanagement is of course changing now. Those who have been with him for the past fourteen years vouch for the change. Some of them were shocked when, after the first board meeting of Bandhan Bank, in July 2015, Ghosh announced that the bar was open at a party which he had thrown at the Novotel Hotel for the senior management. Single-malt Glenlivet was served there. In Bandhan\u2019s fourteen-year history, alcohol was never served at any party.<\/p>\n His crisis management strategy has been unique. When SKS Microfinance was flourishing and everybody else in the industry thought all other MFIs would be wiped out, he kept his calm and held on to his nerves. After watching closely, he introduced a new product in 2007: education loan at 12%\u201410 percentage points less than the cost of other loans at that time.<\/p>\n Why did he do that? There were a couple of reasons.<\/p>\n First, to gain social equity as nobody else was giving education loans; second, he was running the risk of losing some customers who had been paying 22%. He thought it would be better to offer a subsidized loan than losing an income of 22% and acquiring new customers. Education loans were offered only to the existing customers who had already been paying 22%.<\/p>\n Similarly, in 2014, after getting RBI\u2019s in-principle approval for a bank licence he was not sure whether commercial banks would continue to give money to Bandhan. So, he wanted to rein in the loan growth but it was not easy as the customers would get nervous if they felt that Bandhan did not have money to lend.<\/p>\n He started looking at technicalities and found some reason or other to call for close scrutiny of books in certain pockets where the loan demand was too high. Following this, he either cut down the size of disbursements or put them on hold. Nobody suspected anything but his purpose was served. Later, when he was convinced that banks would not stop giving money to Bandhan, it was not difficult to resume giving loans, and the loan growth in the second half of the fiscal year 2015 was phenomenal.<\/p>\n In May 2010, ahead of SKS Microfinance\u2019s initial public offering (IPO), the first by any MFI in India, and much before the crises that engulfed the industry in the aftermath of Andhra Pradesh promulgating a state law, Ghosh slashed interest rates by 5 percentage points to 18.97%, creating a new benchmark. \u2018That was a master stroke which prevented the government of West Bengal from going the Andhra Pradesh way and clamping down on Bandhan,\u2019 says Brij Mohan.<\/p>\n All these people have seen Ghosh as the Bandhan boss.<\/p>\n Nilratan Haldar is someone who had watched him as his boss at BRAC in Bangladesh as a senior programme manager. \u201cA job given to him was done. I had around nineteen trainers working under me but nobody could match Shekhar in resource mobilization,\u201d Haldar told me.<\/p>\n He also mentioned one of Ghosh\u2019s traits that used to irritate him. \u201cHe would pick up handbills, papers, interesting articles in magazines, and keep them in his folder. If he came across a saying like \u2018The most important word in human relationship is \u201cwe\u201d and the least important word is \u201cI\u201d\u2019 on a piece of paper on the road, he would immediately pick it up and keep it in his bag. We always wondered why he was doing this. In fact, if we had lost any piece of paper, we used to say, search Shekhar\u2019s folder.\u201d<\/p>\n Haldar told me that once Ghosh was caught sneaking into BRAC\u2019s computer room which also housed its library, a restricted zone for junior employees like him. After that, Ghosh changed his strategy. He would enter at midnight and keep the person who handled the photocopier on guard.<\/p>\n There, he would read up books on management and make his PowerPoint presentations for the next day\u2019s training. By the time he finished his work, it would be 4 a.m. He would get up at 7 a.m. for a walk, and by 9 a.m., he would be in the classroom.<\/p>\n \u201cHe can turn adversity into an opportunity. The Andhra Pradesh crisis illustrates that; he thrived after that,\u201d says Nanda. The former NABARD chairman is also aware of Ghosh\u2019s cost-consciousness. He is extremely simple and also cost-conscious. In the EC 76, Sector I, Salt Lake City office, where Bandhan was headquartered till 2011, there used to be a wooden bench in his very small cabin on which he would sit and rest. There was no sofa.<\/p>\n \u201cWhen I came to Kolkata to attend the first board meeting, I was put up at a guest house which did not have proper air-conditioning arrangements,\u201d Nanda told me one evening in November over a cup of tea at his flat in Mumbai.<\/p>\n According to former RBI deputy governor Usha Thorat, tremendous consciousness of cost is the hallmark of Ghosh. He speaks the language of the borrower and is in total control.<\/p>\n \u201cHe keeps his cost low by not limiting the number of people he would need… He keeps as many people as he requires but may not give them very high salary… I find his model very interesting… He has total control and at the same time he empowers people and the result is phenomenal growth.\u201d<\/p>\n Nanda also remembers Ghosh was getting a pittance\u2014some Rs.<\/span>8\u201310 lakh\u2014as salary after Bandhan became an NBFC.The board forced him to raise his salary as otherwise it would have been very difficult to get senior executives, as his salary would have capped their compensation. \u201cEven today, he travels economy class on flights. We have forced him to take business class at least on long international flights.\u201d<\/p>\n ASA International\u2019s Haque had an account of Ghosh\u2019s cost-consciousness. Ghosh once took a couple of senior ASA executives and Runu da in a taxi to Park Street. He wanted to show them Kolkata. They got down from the taxi at Park Hotel and walked through New Market. Haque, who had not been to Hajj then, wanted to have beer at a Park Street restaurant. Ghosh entertained the three of them with one bottle of beer.<\/p>\n Is it frugality or Ghosh\u2019s sense of humour? Singh of SIDBI also had a taste of his rustic humour. His Opportunity Fund at Dia Vikas Capital wanted to pick up a stake in Bandhan, but, as a policy, it could not pay a premium. Ghosh refused to offer the stake at a par value, saying, \u201cIf the groom does not charge dowry, the bride\u2019s family thinks there is something wrong with the groom.\u201d<\/p>\n Haque\u2019s final impression of Ghosh? \u201cGhosh was (and is) at the right place, at the right time. He is an explorer; he gives the impression that he is a simple and innocent man but he is wise.\u201d<\/p>\n Vijay Mahajan, a veteran in the MFI business, says Ghosh has seen the business, studied the predecessors well, and learnt lessons from others\u2019 failures. \u201cHe went beyond copying to improvising\u2014the Xerox is better than the original.\u201d<\/p>\n Brij Mohan finds him very good at reading between the lines and that makes him a tough negotiator with auditors, raters and investors. He has also the ability to see things from a different perspective. For instance, when everybody is blaming the over-aggressiveness of the MFI industry for the Andhra Pradesh crisis, Ghosh held the banks responsible as they were flooding MFIs with money. \u201cHad they not been pumping so much money, how would the MFIs manage to grow their balance sheet?\u201d he asks.<\/p>\n According to Nanda, Ghosh\u2019s advantage is that he is not a banker and does not carry any extra baggage. He is driven by strong common sense. \u201cI remember when Bandhan started growing, there was pressure on him to get highly qualified people\u2014CAs and MBAs\u2014at higher cost, but he kept on saying he did not need tigers to catch rats; cats could do the job. He has tremendous understanding of the operations of microfinance,\u201d he says.<\/p>\n Pritish Saha, a senior executive of Bandhan Bank, throws light on the humane aspects of Ghosh. Once, on a typical location survey for an MFI branch in South 24 Parganas, they felt hungry in the afternoon. Along with Ghosh and Saha, there was another gentleman, Robin Biswas, all three riding on one bike.<\/p>\n Ghosh wanted to have bananas for lunch. Biswas got down from the bike and started bargaining hard with a roadside banana seller, an old lady. Ghosh quietly stepped in and bought a dozen bananas for the three of them at the price which the lady asked for.<\/p>\n","protected":false},"excerpt":{"rendered":" There have been many books on microfinance, in India and overseas. Most of them have been written either from the point of view of the…<\/p>\n","protected":false},"author":1,"featured_media":551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-550","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/posts\/550","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/comments?post=550"}],"version-history":[{"count":1,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/posts\/550\/revisions"}],"predecessor-version":[{"id":552,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/posts\/550\/revisions\/552"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/media\/551"}],"wp:attachment":[{"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/media?parent=550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/categories?post=550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bankerstrust.in\/column\/wp-json\/wp\/v2\/tags?post=550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}A relationship man<\/h2>\n
A disruptive management style<\/h2>\n
Turning adversity into opportunity<\/h2>\n