Bandhan Bank stock falls 20% after RBI curbs over its failure to comply with shareholding norms

The Bandhan Bank stock succumbed to selling pressure on the RBI directive and was locked in the lower circuit limit of 20% to 451.20.

The Bandhan Bank stock fell 20% in morning trade today after the Reserve Bank of India (RBI) placed several restrictions on the private sector lender over failure to stick to shareholding norms. At 9:25 am, the stock was trading 20% or 112 points lower at 451 level on the BSE.

The stock opened at 470 level and hit an intra-day high of 484.90 in the early trade. But the Bandhan Bank stock succumbed to selling pressure on the RBI directive and was locked in the lower circuit limit of 20% to 451.20.

Banking regulator Reserve Bank of India (RBI) on Friday stopped Bandhan Bank from opening new branches as it was not able to bring down the shareholding of Non Operative Financial Holding Company (NOFHC) to 40 per cent as required under RBI’s 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“General permission to open new branches stands withdrawn and the Bank can open branches with prior approval of RBI and the remuneration of the MD & CEO of the Bank stands frozen at the existing level, till further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,” Bandhan Bank said in a regulatory filing.

The central bank also ordered freezing of Bandhan Bank CEO Chandra Shekhar Ghosh’s salary over failure to stick to shareholding rules. The promoter stake in Bandhan Bank is currently at around 82.28 per cent. “The Bank 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,” it added.

On Friday, the bank’s shares closed at Rs 565 apiece on the BSE, down 0.78 per cent. Bandhan Financial Holdings Ltd, the bank’s promoter, had to cut its stake to 40% from 82% within three years of starting the business. The deadline for Bandhan Bank was on August 23. After that, the bank’s promoter would be required to cut its shareholding to 20% and 15% within 10 years and 12 years, respectively.

Bandhan, an MFI, was given a conditional approval by the RBI for setting up universal bank in April 2014. The bank became operational on August 23, 2015. The large cap stock has lost 35.06% during the last one month compared to 6.69% fall in the Sensex. During the last one week, the stock has fallen 17.57%. The stock opened at a loss of 16.67% and had only sellers and no buyers in today’s trade. Bandhan Bank made its market debut on April 27 this year, surging 33% compared to the issue price of Rs 375.

As per the bank’s website, it has 937 branches in the country. Based in Kolkata, Bandhan, which started as a micro-finance company in 2001, received banking licence by Reserve Bank of India in 2014.

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