Bandhan Bank Secured Lending Push: Why the Bank Is Moving Away From Tiny Loans
Bandhan Bank is changing the way it lends money. Secured lending means the bank gives more loans that are backed by something valuable, like a house or gold. So “secured lending” is just lending where the borrower gives the bank a safety item to hold.
At the same time, the bank is doing less risky microfinance. Microfinance means tiny loans given to low-income people, usually with no safety item to back them. The bank’s goal is simple. It wants to lend more safely and lose less money to loans that are never paid back.
This change matters far beyond banking. It shows founders, students, and small business owners how India’s lenders think about risk in 2026. Here is what is happening, in plain words.
What does “secured lending” actually mean?
Let us start with the basics. A loan can be “secured” or “unsecured”.
Secured lending means the loan is backed by something valuable. That valuable item is called collateral (the thing you promise to the bank). A home loan is backed by the house. A gold loan is backed by your gold. If the borrower stops paying, the bank can sell that item to get its money back.
Microfinance means very small loans given to low-income people. Often these go to women in villages or small towns. These loans usually have no collateral. They help people start tiny businesses. But they are risky for the bank. If the borrower cannot pay, there is no item to fall back on.
For years, Bandhan Bank was famous for microfinance. Now it wants a safer, more balanced set of loans.
The numbers behind the Bandhan Bank secured lending shift
The change is already showing up in the bank’s records. Secured loans are now about 57% of all of Bandhan Bank’s loans, as reported. That is already ahead of the bank’s own target for the year ending March 2027.
Bandhan Bank wants to settle at a mix of about 65% secured loans and 35% microfinance over the next few years. To get there, secured loans are growing fast. Microfinance is being kept under tighter control.
| Item (as reported) | Figure |
|---|---|
| Share of secured loans in total book | About 57% |
| Yearly growth in secured assets | About 27% |
| Target loan mix (secured : microfinance) | Around 65% : 35% |
| Planned overall loan growth (next 2-3 years) | 15-17% per year (CAGR) |
| Planned secured-loan growth | Above 20% per year |
| Microfinance collection efficiency | Near 99.7% |
| Bad microfinance loans sold (Dec 2025) | About Rs 3,212 crore (to ARCIL) |
One number is worth a closer look. “Collection efficiency near 99.7%” means the bank got back almost every rupee it expected from microfinance borrowers. That is a healthy sign after a tough time.
Why is Bandhan Bank doing this now?
The simple answer is bad loans. A bad loan is also called an NPA (Non-Performing Asset). It is a loan the borrower has stopped paying back for a long time. Too many bad loans hurt a bank’s profit and its good name.
Lately, many microfinance borrowers in India borrowed too much from several lenders at once. When they could not pay it all back, banks like Bandhan felt the pain. To clean things up, Bandhan Bank sold about Rs 3,212 crore of bad microfinance loans in December 2025. It sold them to an Asset Reconstruction Company. That is a firm that buys bad loans from banks and then tries to collect the money.
Moving toward secured lending lowers this risk. If the bank holds gold or a house as backup, it has a real way to get its money back. This push is being led by the Managing Director and CEO, Partha Pratim Sengupta. He is an experienced banker who joined in late 2024. Before that, he spent decades at State Bank of India and Indian Overseas Bank.
What kinds of secured loans is Bandhan growing?
Bandhan Bank is adding more kinds of safer loans. These include:
- Home loans and mortgages (loans backed by property). A mortgage is a loan where your house or land is the backup.
- Gold loans (loans backed by your gold jewellery)
- Loans to businesses, including a new push into corporate and wholesale banking. This means lending to big companies and large clients.
The bank recently opened a special corporate banking branch in Mumbai. This branch is meant to win bigger business clients. It is a clear sign the bank wants to grow beyond its village-lending roots.
Key facts (as reported)
Here is the story so far. Secured loans are now the bigger half of Bandhan’s loans. Microfinance is getting better, with high repayment rates. And the bank has cleaned up its old bad loans. The plan is about steady, lower-risk growth, not fast and risky lending.
Why it matters (especially for India and founders)
This change is a window into how Indian banks think in 2026. Here is why it should matter to you.
For founders and small business owners: banks are being careful. If you want a loan, having collateral can help. Property or stock can make approval easier and rates lower. Unsecured loans may get harder to find, or more costly. This same care about risk also shapes how India handles unpaid debts in court. You can see it in the government’s move to speed up insolvency admissions so lenders get their money back faster.
For students and learners: this is a real lesson in risk and reward. Microfinance brings poor people into the banking system, but it carries higher risk. Secured lending is safer, but it can leave out people who own no assets. Banks must balance the two. Watching how money moves also helps you read the wider startup scene, like the latest early-stage startup funding roundup.
For everyday borrowers: the system is getting healthier. Fewer bad loans mean stronger banks. Stronger banks can keep lending steadily over time.
FAQ
Is Bandhan Bank stopping microfinance completely?
No. The bank still wants microfinance to be about 35% of its loans. It is leaning on it less, not ending it.
What is a secured loan in simple words?
A secured loan is backed by something valuable, like a house or gold. If you do not pay it back, the bank can sell that item to get its money.
What is an NPA or bad loan?
An NPA (Non-Performing Asset) is a loan the borrower has stopped paying for a long time. Too many NPAs hurt a bank’s profit.
Why is secured lending safer for the bank?
Because there is collateral. The bank can sell the backup item if the borrower does not pay. So it is less likely to lose all its money.
The takeaway
The Bandhan Bank secured lending move is about playing it safer after a hard run with bad loans. The bank is backing more of its loans with real items. It is also keeping microfinance under control. The aim is steady, lower-risk growth. For India’s borrowers and founders, the message is clear. In 2026, collateral and discipline are back in style.
Source: Financial Express – Bandhan Bank pivots towards secured lending
