RBI Lifts Some Restrictions Placed On Bandhan Bank
Reserve Bank of India headquarters. (Photographer: Prashanth Vishwanathan/Bloomberg)

RBI Lifts Some Restrictions Placed On Bandhan Bank

The Reserve Bank of India today lifted certain restrictions placed on Bandhan Bank Ltd. after the lender partially complied with the central bank’s promoter shareholding limits.

The microfinance lender-turned-universal bank informed the exchanges today that the central bank has allowed it to open fresh branches without seeking its prior approval. “...it (RBI) has lifted the regulatory restriction on branch opening, subject to the condition that the bank ensures that at least 25 percent of the total number of ‘Banking Outlets’ opened during a financial year are opened in unbanked rural centres,” the bank said in an exchange filing.

The RBI had placed the restrictions in September 2018 as the bank hadn’t met the promoter shareholding limits in the licensing agreement set by the banking regulator. The bank, however, said that the RBI has acknowledged its efforts to comply with the norms. The licensing guidelines require the bank to pare promoter shareholding to 40 percent within three years of commencing operations.

Later in December 2018, Bandhan Bank had announced that it will add 40 more branches, after the regulator gave the necessary approval. Apart from restrictions on branch expansion, the RBI has also blocked any enhancement in Managing Director and Chief Executive Officer CS Ghosh’s remuneration until further notice.

Bandhan Bank acquired housing financier Gruh Finance Ltd. from HDFC Ltd. in December 2018, following which promoter shareholding in the microfinance lender fell to 61 percent—still above regulatory requirements.

Watch the full conversation with Managing Director and CEO CS Ghosh on how Bandhan Bank plans to utilise the RBI relief:

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