Money & Banking

RBI lifts regulatory restrictions imposed on Bandhan Bank

| Updated on: Dec 06, 2021

BFHL reduces stake to 40%; central bank also lifts freeze on CEO’s remuneration

Our Bureau

The Reserve Bank of India, on Monday, withdrew all regulatory restrictions imposed on Bandhan Bank following the promoter entity, Bandhan Financial Holdings Ltd (BFHL), bringing down its stake to 40 per cent in the bank from an earlier level of 61 per cent by selling shares in a block deal on August 3.

In a notification to stock exchanges on Monday, Bandhan Bank said: “As per the intimation, we have received a communication from the Reserve Bank of India dated August 17vide which the RBI has lifted the freeze on the remuneration of the MD and CEO of the Bank at the existing level.”

Promoter holding

The 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 It had also withdrawn permission to open new branches and put a freeze on the remuneration of CS Ghosh.

As per the RBI’s licensing norms, promoter holding should be brought down to 40 per cent within three years of starting operations. 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, the promoting entity of the bank, held close to 82.28 per cent.

However, pursuant to amalgamation of GRUH Finance 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 NOFHC in the bank diluted from 82.26 per cent to 60.96 per cent of its paid-up voting equity share capital. Subsequently, the restriction mandating prior approval of the RBI was was lifted on February 25.

Following Monday’s withdrawal of freeze on the remuneration of the MD and CEO, all regulatory restrictions imposed by the RBI on the bank are now withdrawn, the bank said in the notification.

“This is a major positive development with respect to Bandhan Bank as it removes all regulatory restrictions and any uncertainty consequent thereof,” it said.

Bandhan Bank, which is set to complete five years as a universal bank in August this year, is looking to focus on growing its loan book and diversifying asset portfolio.

Published on August 17, 2020
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