Money & Banking

RBI nod for Bandhan Bank to expand branch network

Our Bureau Mumbai | Updated on February 26, 2020 Published on February 26, 2020

In a reprieve to private sector lender Bandhan Bank, the Reserve Bank of India has lifted curbs on the lender for its failure to dilute promoter stake and has allowed expansion of branch network.

The move, however, failed to cheer investors. Shares of Bandhan Bank, on Wednesday, jumped nearly five per cent in early market hours, but closed 2.38 per cent lower at ₹394.25 apiece on the BSE.

“We would like to inform that the Reserve Bank of India, vide its letter dated February 25, has informed that though the bank is still not in compliance with the licensing condition on dilution, considering the efforts made by the bank to comply with the said licensing condition, it has lifted the regulatory restriction on branch opening,” it said in a regulatory filing.

The relaxation in branch expansion is subject to the condition that the bank ensures that at least 25 per cent of the total number of banking outlets opened during a financial year are in unbanked rural centres, it further added.

The relaxation comes soon after another private sector lender, Kotak Mahindra Bank, also reached an agreement with the RBI on dilution of promoter stake holding. Since then, it was widely expected that the RBI would allow some kind of relaxation for Bandhan Bank as well.

The RBI had, in September 2018, barred Bandhan Bank from expanding its network, as the lender failed to reduce the promoters’ stake to 40 per cent from close to 82 per cent within the stipulated three-year time frame of commencing operations.

Since then, the bank has also merged with Gruh Finance to shed promoter stake.

Published on February 26, 2020
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