RBI lifts ban, allows Bandhan Bank to open branches

KOLKATA: The Reserve Bank of India (RBI) Tuesday allowed Bandhan Bank to open branches without its prior approval, lifting a ban imposed on the lender for failing to reduce promoter ownership below the mandated 40%.

Bandhan Bank’s current promoter holding at 61% is still above the regulatory ceiling. However, RBI has removed the restriction “considering the efforts made by the bank to comply with the said licensing condition”, the Kolkata-based bank said in a regulatory filing to stock exchanges.

The easing of curbs has come within a month of RBI allowing Kotak Mahindra Bank’s founder Uday Kotak to own a higher 26% stake than the earlier regulatory stipulated of 15%.

Bandhan Financial Holdings Ltd is the holding company and promoter of Bandhan Bank. Its holding was diluted to 61% from 82% after the acquisition of Gruh Finance last year.

RBI first came down heavily on Bandhan Bank on September 28, 2018, including a freeze on its founder-cum managing director Chandra Shekhar Ghosh‘s salary at the September 2018 level.

The removal of the restriction has a condition attached: at least a quarter of the new banking outlets to be opened in a financial year must serve unbanked rural centres.

After the RBI bar on free branch opening, the bank opened as many as 72 branches with prior RBI’s approval.