Kolkata: There’s hardly anything untold about Bandhan Bank’s founder and managing director Chandra Shekhar Ghosh, whose rags-to-riches story has been chronicled several times. It has even inspired a paperback, but in the wake of the Rs4,473 crore Bandhan Bank IPO, it turns out that the story is still unfolding.

With Bandhan Bank shares listing at Rs499 each, thousands of people—many from humble backgrounds—have overnight turned into paper-millionaires, who can, at their will, cash their investments and take home the windfall. Privately, some of these people confessed that the wealth Ghosh has created for them kind of felt unreal.

Some 3,000 people own shares through a trust worth Rs6,710 crore. Collectively, they own 14.61% in Bandhan Financial Services Ltd (BFSL), the ultimate holding company, which, in turn, holds around 82.28% of the bank’s post-issue equity capital. Another small group of some 40 employees separately own 3.39% in BFSL. Their stake in the holding company is worth Rs1,558 crore, calculated on the basis of the price of the bank’s listed shares.

These are people who trusted Ghosh with their paltry savings to set up Bandhan, which started off as a microfinance company in 2001 and has now emerged to be India’s eighth most valuable bank by market capitalization. With its shares closing at Rs468.30 on BSE on Wednesday, the last day of trading, the bank is currently valued at Rs55,859 crore by its share price.

Some 30 employees, including Ghosh himself, came together and ploughed their savings into the operations of Bandhan in its early days, recalls Ghosh. “When (in 2009) I was forming the NBFC (non-banking financial company), who would trust me to provide capital?" he asks. So employees came together and contributed small sums of money—Rs10,000-20,000 each.

Later, when more employees were willing to provide risk capital for the fledgling venture, he asked them to form a trust. And thus came into being Bandhan Employees Welfare Trust. If those invested in the bank indirectly through the trust wish to cash out, they must sell within the trust following an established arrangement, says Ghosh.

Even before he secured the banking licence in 2014, Ghosh got the attention of foreign investors such as International Finance Corporation, an arm of the World Bank, for being frugal, says an official, who has worked closely with him for years. As a microfinance institution, Bandhan’s operations were “extremely lean" staffed with people from “very humble backgrounds", he says, asking not to be identified.

Ghosh believed only people who had themselves suffered poverty could work for the under-privileged. “Pay wasn’t great, not surprisingly, but all those people who had confidence in him have today been hugely rewarded," he says, adding that for many, the financial reward has far exceeded what they could ever dream of.

“I have always tried to reward employees to the best of my ability," says Ghosh.

To strike a balance, Bandhan Bank has started an employees’ stock options scheme to provide shares to some 3,000 employees. The aim is to motivate employees, says Ghosh. His bank currently has some 28,000 employees, and the rate of attrition is about 8% a year. In the past two years, some 15,000 people have joined the bank. At the time of going public, the bank had granted a little over two million stock options, which would convert into as many shares.

Two other trusts also own substantial stakes in BFSL—the ultimate holding company: Financial Inclusion Trust and North East Financial Inclusion Trust. They own, respectively, 32.91% and 7.82% in BFSL. These trusts were started by Bandhan Konnagar, a non-government organization (NGO), as public charitable trusts. When Ghosh started to make tiny working capital loans to the poor, he did so through the NGO, until he transferred the business to an NBFC.

He argues that only these two charitable trusts should be treated as the promoters of Bandhan Bank. Their collectively holding being 40.73% in the ultimate holding company, promoters’ ownership in Bandhan Bank is in line with the guidelines of the Reserve Bank of India (RBI), he claims. “Still we will have to discuss this with RBI and see what can be done," he says in the light of the central bank asking for further reduction in promoter holding.

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