Bandaa is the story of Basheer (Sandeep Kulkarni), em honest and peace-loving resident of Kuldabad, a small town in Maharashtra. Basheer is a practising Muslim, who spreads the message of communal harmony. In spite of his poverty, Basheer and his wife (Varsha Pawar) lead an honest life.
But Basheers son, Saeed wants to bribe his way into a government job so he asks Wali Jalaluddin a local community leader for help. Wali bribes Basheer with Rs. 2 lakh for planting a bomb at the local mosque. Basheer takes the money and the bomb but does not plant the bomb due to his conscious.
Now the town witnesses communal riots engineered by Wali. Wali's goons also destroy Basheers house and his mother also dies. Saeed also gets arrested in the riots. The stry the revolves around does Basheer change his principles to save his family.