Bandhan Bank’s share price fell over 6 per cent on Monday as its MD and CEO Chandra Shekhar Ghosh decided to retire once his current tenure ends on July 9, 2024.

The scrip of the Kolkata-based lender ended the day on ₹184.95 apiece on BSE, down 6.31 per cent from the previous close, with analysts raising concern over management uncertainty in the near term as so far no clarity has emerged on management succession. “The resignation has come as a negative surprise as the board had approved the re-appointment of Ghosh as MD and CEO for three years in November, 2023. We reiterate that Ghosh has been the founder and has been instrumental in the overall functioning of the bank, and therefore, his resignation could significantly alter overall growth and profitability of the bank,” said ICICI Securities in its report on April 7.

The board of directors of Bandhan Bank at its meeting held on April 5 took on record the letter submitted by Ghosh informing his retirement plan. In the letter, he also informed that he is looking forward to taking a larger strategic role at the Bandhan Group level.

The bank’s shares opened at ₹189.95 on Monday against the previous close of ₹197.40. The share price plunged as much as 9 per cent in early trade to ₹179.55 apiece before closing at ₹184.95.


“We believe the timing of the resignation is unfortunate as the bank is still seeing elevated asset quality stress while the two executive directors are fairly new to the bank and there have been multiple senior exits in the last couple of years. We have seen sharp negative stock price reaction in cases where there is not much clarity on management succession. We believe the stock price ahead could tread divergently vs underlying business or financial performance until more clarity emerges on MD and CEO succession,” ICICI Securities pointed out.

In its report, Macquarie Capital Securities said, ”With the retirement of Ghosh within the next three months, the board will have to rapidly commence the process for appointment of a new CEO, which will require the sending of three names to the RBI for approval; post RBI’s due diligence, one candidate will be appointed. Not only do we believe this process will be tedious, we also believe that until the time there is clarity on the CEO candidate the stock will underperform.”

A challenge

Finding a CEO is a new challenge, with the bank already facing the long-lasting issue of increasing delinquencies in its micro-finance loan book, Macquarie said, adding while peers, post Covid, have witnessed improvement in asset quality, Bandhan has been unable to control the forward flow of slippages in its micro-finance book, leading to higher delinquencies. “This has led to significant underperformance in the stock — down 50 per cent since January 2021,” it added.

During a conference call with analysts on Monday, Ghosh said, “I am transitioning to a higher strategic role at the holding company level. In my new role, I will pursue a strategic responsibility where I plan to leverage my experience and insights to contribute to the overall growth.”

Ghosh’s decision to retire from the bank came at a time when the forensic audit by the National Credit Guarantee Trustee Company (NCGTC) is underway. The bank’s management said the audit is still going on and it is going to take another one month or so to conclude.