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RBI permits Bandhan Bank branch expansion, stipulates conditions

Bandhan Bank was barred from expanding its network in September 2018 as it had failed to reduce the promoters' stake to 40 percent within the stipulated three-year period

February 26, 2020 / 10:12 AM IST
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The Reserve Bank of India (RBI) on February 25 has greenlit Bandhan Bank's branch network expansion plans. The decision was made after considering the lender's efforts to comply with the licensing conditions.

Bandhan Bank was barred from expanding its network in September 2018 as it had failed to reduce the promoters' stake, which stood at 82 percent, against the permitted 40 percent, within the RBI's stipulated three-year time frame of commencing operations.

The bank commenced operations on August 23, 2015, and was thus required to comply by 2018.

Current promoters' stake in the bank is still over the licensing condition on dilution at 62 percent, but it in a regulatory filing said that "considering efforts made" RBI has lifted the regulatory restriction on branch opening. This is, however, subject to the condition that the bank ensures at least 25 per cent of the total number of banking outlets opened during a financial year are opened in unbanked rural centres.

According to RBI's bank licence norms, a private sector bank's promoter will need to pare holding to 40 per cent within three years, 20 per cent within 10 years and to 15 per cent within 15 years.

Bandhan Bank currently has 4,288 banking outlets, including branches.

Bandhan Bank shares closed at Rs 403.85 on BSE, down 1.15 per cent from the previous close.

(With inputs from PTI)

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