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Bandhan Bank owner cuts 21% stake to meet RBI norms

Our Bureau Kolkata | Updated on August 03, 2020 Published on August 03, 2020

GIC Singapore, SBI, Blackrock among buyers

Bandhan Financial Holdings Ltd, the holding company of Bandhan Bank, has sold 33.74 crore shares in the Bank through secondary market transaction thereby diluting its excess shareholding of 20.95 per cent.

According to Chandra Shekhar Ghosh, Managing Director and CEO, Bandhan Bank, GIC Singapore, Blackrock and SBI Mutual Fund were among the buyers. According to BSE bulk deal data, Morgan Stanley Asia and Bandhan Employees Welfare bought 81.75 lakh shares and 93 lakh shares respectively. Others include Copthall Mauritius, Societe Generale and, Credit Suisse.

In a notification to the exchanges on Monday, the Bank said, consequent to the transaction, the shareholding of NOFHC (Non-Operative Financial Holding Company) is reduced to 40 per cent of the total paid-up voting equity capital.

“With this transaction, we are now in compliance of RBI norms and our focus moving forward would be on growing our business and diversifying our asset book,” Ghosh told BusinessLine.

Karthik Srinivasan, group head, financial sector ratings, ICRA, said: “RBI has been very clear emphasising on the need for a diversified shareholding in private banks so as to reduce any concentration risk. The secondary market transaction is clearly the fastest route to bring down stake,” he said.

The shares of the Bank slid 10.60 per cent to ₹308.65 on the BSE on Monday.

Violation of norms

RBI had, in September 2018, pulled up the Bank for its failure to bring down promoter holding to 40 per cent as mandated in the licensing norms for universal bank. It had also withdrawn permission to open new branches and put a freeze on the remuneration of CS Ghosh.

So Bandhan Bank, which had commenced operations in August 2015, should have ideally brought down the promoter holding by August 2018. But, Bandhan Financial Holdings held 82.28 per cent.

However, pursuant to amalgamation of Gruh Finance Ltd into and with the bank, which became effective in October 2019 and consequent to issuance of fresh equity shares to the shareholders of Gruh, the shareholding of promoter got reduced from 82.26 per cent to 60.96 per cent.

Completes five years

Bandhan Bank is set to complete five years as a universal bank in August. According to Ghosh, the first three years was largely a transformative phase turning from a microfinance institution to becoming a universal bank and the next two years were focused on stabilising operations. Moving forward, the bank would focus on growing its loan book and diversifying asset portfolio.

“We will continue to focus on our microcredit business and will also look at promoting eligible microcredit borrowers as MSMEs. This apart, we will also look at strengthening our rural housing finance portfolio,” he said.

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Published on August 03, 2020
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