RBI IMPOSES CURBS ON BANDHAN BANK

BE/RBI NOTE/42/2018

Bandhan Bank

Bandhan Bank was unable to bring down the promoter share holding to 40 per cent from 82.28 per cent which was a pre-set condition while issuing a license to the bank.

  1. Due to the above noncompliance RBI has barred Bandhan Bank from opening new branches.
  2. Also, RBI issued orders to freeze the remuneration of its MD and CEO Mr. Chandrashekar Ghosh
  3. The shareholding of the Non Operative Financial Holding Company (NOFHC), was to be brought down from 82.28 per cent to 40 per cent which the Bank could not comply with.
  4. However new branches can be opened by the bank with the prior approval of RBI.

Background:

The bank confirmed that it is taking necessary steps to bring down the NOFHC shareholding to 40 per cent and would adhere to RBI instructions in this regard.

In principle approval of RBI was accorded to the said bank for setting up a Universal bank in the year 2014 and final approval was given in the year 2015.

RBI condition stipulates that Private Sector Bank should ensure to bring down their promoters’ contribution to 40% within three years of operation.

Consequent upon the bank’s going for an IPO in March this year, the promoters’ contribution which was 89.62 came down to 82.28 percent.

Public hold 17.72 percent stake in the bank.

Note:

  • RBI has been very strict with erring banks these days. To quote a few:
  • It refused to approve a third three year term for Axis Bank MD and CEO Shikha Sharma
  • It refused to clear the preferential issue of Kotak Bank for dilution of promoter’s stake
  • It has said that the term of YES Bank MD and CEO Rana Kapoor will end on 31st Jan 2019. Earlier its board had recommended for another three year term for its MD and CEO.

 

Author: Admin Bankedge

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