Even as the banking sector is reeling from the Rs 12,700 cr-PNB scam, there is some good news as the newly formed Bandhan Bank is set to come up with one of the biggest IPOs among banks in a long time.
Amid the gloom in the banking sector following the Punjab National Bank (PNB) crisis, there is some good news. The newly formed Bandhan Bank has announced plans to launch one of the biggest IPOs among private sector banks in a long time.
The Kolkata-based microfinance institution-turned universal bank will be raising up to about Rs 4,473.75 crore from the IPO (initial public offering) next week through sale of 11.93 crore equity shares. This comes after a successful IPO by mid-sized private lender RBL Bank in 2016.
The price band of the IPO has been finalised at Rs 370-375 per share and the bids would remain open from March 15 to 19.
Chandrashekhar Ghosh, the Bank’s CEO and MD told Moneycontrol in an exclusive interview that the IPO will help Bandhan Bank in better compliance, more transparency to investors and grow its business.
The bank’s management will also have to sit with the Reserve Bank of India to discuss its promoter shareholding, which is required to be brought down to 40 percent after the listing.
Currently, Bandhan Bank’s promoter shareholding stands at 89 percent and will be reduced to 82 percent after the IPO as they sell shares to the public.
Read Interview: Speaking on the ongoing frauds and scams in the banking system, Ghosh said banks need to focus on capacity building and make employees more responsible in providing service than focus on money.
RBI penalty to banks
During the week, the banking regulator penalised four banks including State Bank of India (SBI) and Airtel Payments Bank for breaching RBI norms.
SBI was hit with a monetary penalty of Rs 40 lakh for violating RBI rules on Detection and Impounding of Counterfeit Notes.
It also imposed penalties of Rs 3 crore and Rs 2 crore on Axis Bank and Indian Overseas Bank, respectively, for not complying with the central bank’s norms on classification of non-performing assets (NPAs) and know your customer (KYC).
Sunil Mittal-owned Airtel Payments Bank, in December last year, was alleged to have used Aadhaar-eKYC based SIM verification process to open its payments bank accounts, without the account holders’ consent. Through this, reports suggest, more than 23 lakh customers had reportedly received Rs 47 crore in their Airtel bank accounts, which they did not know had been opened. RBI slapped a penalty of Rs 5 crore for the same.
PNB scam developments
In the latest developments, the Serious Fraud Investigation Office (SFIO) is probing 107 companies and seven Limited Liability Partnerships linked to Nirav Modi and Mehul Chokshi groups with regard to the nearly Rs 12,700 crore PNB scam. A multi-agency probe is already underway into the fraud which was mainly perpetrated by way of fraudulent Letters of Undertaking (LoUs).
Finance Minister Arun Jaitley, who is also the Corporate Affairs Minister, said the ministry has filed a petition against individuals, groups and their entities belonging to Nirav Modi and Mehul Choksi Groups before the Mumbai bench of the National Company Law Tribunal (NCLT).
The scam unearthed at PNB seems to have impacted the bank’s business operations including bulk deposits and brokerage transactions as institutions wait for investigations to end.
Further, worried about the fallout of the scam on the image of the gems and jewellery industry, the Gem and Jewellery Export Promotion Council (GJEPC) is likely to expel Nirav Modi and Mehul Choksi from the body. Colin Shah, vice chairman of GJEPC, has said that the duo has been issued a showcause notice, as per procedure, and that the body will likely terminate their memberships over the past four weeks.
In another alleged scam, the Enforcement Directorate also filed a charge sheet against a former Andhra Bank director in an alleged Rs 5,000-crore bank fraud case involving a Gujarat-based pharma firm.
In other news
Foreign lender Citibank has announced a new home loan product that links interest rates to the 3-month Government of India treasury bill benchmark Rate (T-Bill), to keep rates at par with the Reserve Bank of India’s (RBI) policy rates.
This comes at a time when most banks are still hesitant on complying with the RBI’s suggestion last month to link home loans to external benchmark rates.
The Government, on Friday, said it has sought Rs 13,000 crore more from the Reserve Bank of India over the Rs 30,659 crore surplus fund it transferred earlier.Banks' gross NPAs at Rs 8.41 lakh crore in Dec