Bandhan Bank is yet to submit a plan for reduction of the promoter shareholding of Bandhan Financial Holdings in the bank to the Reserve Bank of India (RBI) as it continues to look at three options to comply with the central bank’s ownership norms for private banks.
At a post-results press conference on Wednesday, the bank’s management said that the three options are an offer for sale (OFS) of the holding company’s shares, a merger and acquisition (M&A) deal, or a primary issue of shares.
Last month, the RBI had asked Bandhan Bank to stop opening new branches while also freezing CEO Chandra Shekhar Ghosh’s salary, in what is the second instance of regulatory action against a private bank promoter for not complying with shareholding norms. Earlier this year, RBI had rejected Kotak Mahindra Bank founder Uday Kotak’s bid to bring down his personal holding in the bank to under 20% by issuing perpetual non-cumulative preference shares.
Ghosh said Bandhan Bank’s growth will not be affected by the RBI’s strictures as the lender will focus on increasing the business generated by each branch. “The bank has opened 938 branches in three years. On an average, each branch has 3,000 customers. We would focus on deepening the branches in terms of increasing customers. That is an opportunity for us. Business growth will continue,” he said.
According to the RBI’s guidelines for licensing of new banks in the private sector, when an NBFC launches a private bank through an NOFHC, it shall initially hold a minimum of 40% of the paid-up voting equity capital of the bank, which shall be locked in for a period of five years, and which shall be brought down to 15% within 12 years. At the end of June 2018, Bandhan Financial Holdings held an 82.28% stake in the bank. Bandhan Bank was listed on the exchanges on March 27, 2018.
The RBI norms in this case may be at odds with a Securities and Exchange Board of India (Sebi) regulation that mandates a three-year lock-in period for promoter shareholdings. Ghosh refused to comment on whether Bandhan Bank has sought a dispensation from the RBI to resolve the issue.
Bandhan Bank’s shares ended 5.6% higher compared to their previous close at Rs 512.05 on the BSE.