Bandhan Bank eyes options to reduce promoters’ stake
MUMBAI: Bandhan Bank is exploring inorganic opportunities to reduce promoters’ stake after the Reserve Bank of India came down heavily on the bank for failing to cut the shareholding of its non-operating financial holding company (NOFHC) to 40%. In a conference call with equity analysts on Saturday, bank officials also said it is evaluating starting non-banking businesses at the NOFHC level.
Senior bank officials, including managing director and chief executive Chandra Shekhar Ghosh and chief financial officer (CFO) Sunil Samdani, participated in the call.
According to RBI regulations, an NOFHC is allowed to pursue non-banking financial services business three years after commencing business. “The bank could look at other businesses like asset management and insurance,” said Edelweiss Securities in its note to investors.
The analysts’ call comes a day after RBI barred Bandhan Bank from opening new branches without its approval and ordered freezing Ghosh’s salary over its failure to bring down the share of NOFHC to 40% as mandated under the licensing conditions. In a statement to the exchanges on Friday, the bank had said that it is taking necessary steps to comply with the shareholder requirement and that it continues to engage with RBI.
That said, Bandhan Bank had been exploring inorganic growth opportunities lately. Its planned acquisition of PNB Housing Finance, however, failed to materialize, leading to the delay in fulfilling the licensing requirement of paring promoter stake by 40% by August this year.
According to the Edelweiss note, the bank’s management ruled out any secondary issuance till March 2019 as promoters have to comply with the oneyear lock-in period requirement as part of its listing norms. The bank had started operations in August 2015 and got listed on the bourses in March 2018.
“The management said that it is not looking at seeking any dispensation from Sebi for this purpose,” the note added.
Another way to dilute promoter stake is through dissolving the holding company structure, a condition laid down at the time of applying for the banking licence. Bandhan was issued a universal banking licence under the RBI’s 2013 guidelines for licensing of new private sector banks, under which a promoter was required to hold the bank through an NOFHC. This condition was dropped later when the RBI came out with revised guidelines in 2016.
Shares of Bandhan Bank Ltd fell 0.96% to close at ₹564 per share on Friday on the BSE, while the benchmark Sensex index lost 0.27% to close at 36227.14 points.