The Reserve Bank of India (RBI) has lifted the restrictions placed on Bandhan Bank CEO’s remuneration after the promoter’s holding in the bank was reduced to 40 per cent, the bank informed the stock exchanges on Monday.
"The RBI vide its communication dated August 17, 2020 has lifted the other regulatory restriction "the remuneration of the MD & CEO of the Bank stands frozen, at the existing level," the bank said in a note to exchanges.
Early this month, Bandhan Financial Holdings, the holding company of Bandhan Bank, had brought down its stake in the lender to 40 percent from around 61 percent, through a block trade. The holding company sold its stake worth around Rs 10,500 crore in the bank.
Under RBI norms, the Bandhan promoter had to bring down its stake in the bank, which was at 60.95 percent before the transaction, to 40 percent in the first stage.
Under current RBI rules, Bandhan Bank need not reduce promoter stake any further for another three years, the bank's CEO, Chandrashekhar Ghosh had told Moneycontrol on August 3. Ghosh and his family members together have around a 2 percent stake in the holding company.
Bandhan Bank's promoter holding was actually at 82 percent before the acquisition of GRUH Finance last year. In September 2018, RBI imposed punitive actions on Bandhan Bank. This included withdrawing permission to open branches and freezing the remuneration of the Managing Director and CEO of the bank at the existing level until further notice.
However later, in February 2019, the RBI allowed the bank to open branches without its approval with the rider that at least a quarter of the branches be opened in unbanked rural areas in a year. This relaxation was given after RBI noted that it was impressed with the bank's efforts to comply with the licensing rules.
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