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RBI cracks whip on Bandhan Bank for violating shareholding norms

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Kolkata :The Reserve Bank of India (RBI) has withdrawn the “general” permission given to Bandhan Bank to open branches and has frozen the remuneration of its managing director (MD) and chief executive officer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(NOFHC) to 40 per cent, as required under the licensing condition, general permission to open new branches stands withdrawn and the bank can open branches with prior approval of the RBI.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.


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MPC to meet six times during 2019-20: RBI

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Mumbai: The Monetary Policy Committee (MPC), which decides on key interest rates, will meet six times during the next financial year, the Reserve Bank of India (RBI) said.

The first meeting of the six-member MPC to decide on the first bi-monthly monetary policy statement for 2019-20 will be held from April 2 to 4.

The policy will be announced on April 4. Headed by RBI Governor Shaktikanta Das, the committee also includes two representatives from the central bank and three external members.

 

The external members are Indian Statistical Institute professor Chetan Ghate, Delhi School of Economics Director Pami Dua and Indian Institute of Management-Ahmedabad professor Ravindra H Dholakia.

According to the schedule provided by the RBI, the second meeting of the MPC in the next fiscal will be held on June 3, 4 and 6; third meeting (August 5-7); fourth meeting (October 1, 3 and 4); fifth meeting (December 3-5) and sixth meeting (February 4-6, 2020).

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SBI raises Rs 1,251 crore by issuing Basel III-compliant bonds

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New Delhi: The country’s largest lender State Bank of India (SBI) said it has raised Rs 1,251.30 crore by issuing Basel III-compliant bonds.

“The Committee of Directors for Capital Raising at its meeting held today on 22 March 2019 deliberated and accorded approval to allot 12,513 non-convertible, taxable, perpetual, subordinated, unsecured Basel lll-compliant additional tier-I bonds, for inclusion in additional tier-I capital of the bank…aggregating to Rs 1,251.30 crore,” SBI said in a regulatory filing.

The bonds with a face value of Rs 10 lakh each bears a coupon rate of 9.45 per cent per anum payable annually with call option after 5 years or any anniversary date thereafter, it said. The bonds were subscribed on Friday, it added.

 

State Bank of India (SBI) also said the central board of the bank at its meeting held has accorded its approval for extension of validity period for raising equity capital of up to Rs 20,000 crore from market by way of follow-on public offer, qualified institutional placement, preferential allotment, rights issue or any other mode or a combination of these till March 31, 2020.

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Sebi fines 4 entities Rs 27 lakh for fraudulent trading in BSE stock options

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New Delhi: Markets regulator Sebi imposed a total penalty of Rs 27 lakh on four entities for indulging in fraudulent trade in illiquid stock options segment of BSE.

Umapati Oil Mill and Ginning Factory, Yudhbir Chhibbar, Kasturbhai Mayabhai Pvt Ltd and Vimladevi Shyamsunder Khetan are the four entities, according to Sebi’s separate orders.

fter observing a large-scale reversal of trades in the BSE’s illiquid stock options segment, Sebi conducted a probe from April 2014 to September 2015.

 

Following the probe, the regulator found that the trades executed by the entities were not genuine as they were reversed within few seconds with same counter parties with significant difference in price, resulting in profit to the entities.

Securities and Exchange Board of India (Sebi) said it was a deliberate attempt to deal in such a fashion and not a mere coincidence.

The trades executed by the entities were not genuine and created an appearance of artificial trading volumes, thereby violating PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) regulations, Sebi noted.

Accordingly, a fine of Rs 8.7 lakh and Rs 8.4 lakh were imposed on Yudhbir Chhibbar and Vimladevi, respectively while a penalty of Rs 5 lakh each was levied on Umapati Oil Mill and Kasturbhai Mayabhai Pvt Ltd, totalling Rs 27.1 lakh.

In a separate order, Sebi imposed a total fine of Rs 6 lakh on four promoters of Artech Power Products for delayed disclosures to exchanges regarding their change in the shareholding in the company.

Ranjith Vijayan, I V Vijayan, Repsy Vijayan and Resmi Vijayan are the four promoters, according to Sebi’s order.

The promoters have deprived the vital information to the public by non-disclosure /delayed disclosure as mandated by the Takeover Regulations, Sebi noted.

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