Business Other News 29 Sep 2018 RBI bars Bandhan Ban ...

RBI bars Bandhan Bank’s expansion

DECCAN CHRONICLE. | DECCAN CHRONICLE
Published Sep 29, 2018, 12:48 am IST
Updated Sep 29, 2018, 12:48 am IST
Going a step further, RBI has also frozen the remuneration of its CEO & MD Chandra Shekhar Ghosh till further notice.
Reserve Bank of India
 Reserve Bank of India

Mumbai: The Reserve Bank of India (RBI) has withdrawn its general permission granted to Bandhan Bank for opening new branches citing the bank’s failure to bring down its non-operative financial holding company (NOFHC) shareholding to 40 per cent. 

Going a step further, RBI has also frozen the remuneration of its CEO & MD Chandra Shekhar Ghosh till further notice. “RBI has communicated to us that since the bank was not able to bring down the shareholding of NOFHC to 40 per cent as required under the licensing condition, general permission to open new branches stands withdrawn and the bank can open branches with prior approval of RBI and the remuneration of the MD & CEO of the bank stands frozen at the existing level, till further notice,” the bank said in its disclosure to the listing department of the National Stock Exchange (NSE). 

The bank informed that it is taking necessary steps to comply with the licensing condition to bring down the shareholding of NOFHC in the bank to 40 per cent and shall continue to engage with RBI in this behalf. 

Bandhan Bank, which started as a micro finance lender in 2001 received license from RBI to set up universal bank in April 2014. It currently has 937 branches across India. 

According to the guidelines issued by RBI in February 2013 for licensing of new banks in the private sector, a non banking financial company  (NBFC) would be considered eligible to set up a bank through a wholly-owned Non-Operative Financial Holding Company (NOFHC). 

However, it added that NOFHC shall initially hold a minimum of 40 per cent 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 per cent within 12 years.

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