Agencies
Kolkata :The Reserve Bank of India (RBI) has withdrawn the “general” permission given to Bandhan Bank to open branches and has frozen the remuneration of its managing director (MD) and chief executive officer (CEO), Chandra Shekhar Ghosh (pictured), at the existing level, after it failed to comply with the norm of bringing down promoters’ shareholding to 40 per cent by the deadline of August 23. However, the bank can open branches with the approval of the regulator.
In a regulatory disclosure, Bandhan Bank informed the exchanges that “since the bank was not able to bring down the shareholding of non-operative financial holding company (NOFHC) to 40 per cent, as required under the licensing condition, general permission to open new branches stands withdrawn and the bank can open branches with prior approval of the RBI. The remuneration of the MD and CEO of the bank stands frozen at the existing level, till further notice.” The licensing norms require a bank to bring down promoter holding to 40 per cent within three years of starting operations. Bandhan Bank commenced operations on August 23, 2015.
Bandhan Financial Holdings Limited (BFHL) acts as the promoting company for Bandhan Bank, with the promoters’ holding at 82.28 per cent. The bank went for an initial public offering (IPO) in March this year, after which the promoter holding came down from 89.62 per cent.
According to the Securities and Exchange Board of India’s (Sebi’s) rules, promoters have a mandatory one-year lock-in period after the IPO in which they cannot sell their shares.
Bandhan Bank MD Chandra Shekhar Ghosh could not be reached for comments. However, the bank said in the notice to the stock exchanges, “The bank is taking necessary steps to comply with the licensing condition.”
The RBI’s diktat will slow down the aggressive growth charted by the bank over the past three years. It started operations with 501 branches and took it to 937 by August 23 this year. It was planning to have 1,000 branches by the year-end.
As of June 30, the bank had mobilised deposits of Rs 307.03 billion and its loan book stood at Rs 325.1 billion, with a majority of loans being micro ones.
According to the annual report of Bandhan Bank, Ghosh’s remuneration for 2017-18 was Rs 23.95 million, against Rs 19.47 million in 2016-17.
Earlier, one of the proposals mulled by Bandhan Bank to reduce the promoters’ shareholding was to merge Bandhan Financial Services, Bandhan Financial Holding, and Bandhan Bank. This would bring down the promoters’ holding to about 40 per cent. However, in general, the RBI has been in favour of a holding company for a new bank, as it protects depositor interests. At present, Bandhan Financial Services is the 100 per cent owner of Bandhan Financial Holdings, a non-operating financial holding company.
(Except for the headline, this story has not been edited by The Kashmir Monitor staff and is published from a syndicated feed.)
