IDFC First vs Bandhan: While major players in the Indian banking landscape are striving to strengthen their positions, IDFC First Bank and Bandhan Bank are in the news for their niche strengths and their ability to overcome past challenges. The latest Q3 FY26 results have made it clear that both banks are now leaving their past obstacles behind and embarking on a new growth path.
IDFC First Bank
The December 2025 quarter proved to be a milestone for IDFC First Bank. The bank reported a robust 48% year-on-year jump in its net profit to ₹503 crore. Under the leadership of MD and CEO V. Vaidyanathan, the bank’s biggest achievement is its improved liability profile.
The bank’s CASA ratio has now reached a high of 51.6%, one of the best among private banks. High operating costs (Opex), which had been a major constraint, are now improving as the bank’s digital infrastructure is yielding the benefits of scale.
The bank has cut its savings rates, reducing its cost of funds and improving its net interest margin (NIM) to 5.76%. Most importantly, the bank’s microfinance (MFI) stress is now on the verge of subsiding, further stabilizing its asset quality.
Bandhan Bank
Bandhan Bank, which has been grappling with asset quality and MFI sector stress for some time, is now undergoing a major turnaround. The bank recently sold its bad loan portfolio of over ₹6,800 crore to an asset reconstruction company (ARC), significantly cleaning up its balance sheet.
Q3 FY26 was a respite for Bandhan Bank, with its net profit increasing by a massive 84% compared to the previous quarter. The bank’s biggest strength is its diversification strategy. Bandhan Bank is no longer limited to micro-lending; its secured loan book (housing and retail loans) now accounts for 57% of total loans. The bank aims to increase its return on assets (ROA) to 1.3-1.5% over the next two years.
Past Obstacles and Future
IDFC First Bank’s biggest challenge in history was its transformation from an infrastructure bank to a retail bank, which it has completed. Now, its focus is solely on reducing its cost-to-income ratio. Meanwhile, geographic concentration (especially its dependence on eastern India) was a major obstacle for Bandhan Bank, which is now mitigating by expanding its presence in non-eastern states.
Investors and Customers
Both banks are now moving beyond the category of “growth challengers” and establishing their own niche. While IDFC First Bank is attracting urban and semi-urban customers through its digital agility and ethical banking, Bandhan Bank is strengthening its rural network with safe and diversified loans. Banking experts believe that if these two banks continue to maintain their asset quality, 2026 will be a major turning point for them.
