Bandhan Bank effect: RBI said to nix Annapurna’s universal bank licence plea
The Reserve Bank of India, (RBI), in a cautious move, declined Annapurna Finance Ltd’s application for a universal bank licence made in January 2023.
The regulator, expressing hesitation about awarding a fullservice bank licence to the Odishabased lender, largely focusing on microfinance loans, gave Annapurna Finance the option to become a small finance bank.
However, it is gathered from sources with knowledge of the development that Annapurna had declined the alternative put forth by the regulator. “Annapurna’s idea was to become a universal bank because it could permit them to operate in businesses much more than what they are doing. As an SFB, the company doesn’t see much of incremental value proposition and given how a majority of SFBs are still yet to take a dominant share in the industry, didn’t want to try that route,” said a source quoted earlier. It is understood the same has been communicated to the regulator.
When contacted, Dibyajyoti Pattanaik, the company’s director, said, “We have no idea about this matter, and we have not received any communication from RBI in this regard.”
Piramal’s stake buy
Recently, Piramal Alternatives Trust, a whollyowned subsidiary of Piramal Enterprises, announced it will acquire a 10.4% stake in Annapurna Finance for ₹300 crore in cash consideration.
Point of discomfort
Despite nine years of operations as a universal bank, Bandhan Bank’s loan book is heavily tilted towards microfinance loans. Taking a cue, there were concerns raised about Annapurna’s ability to diversify its loan book beyond MFI.
With such high MFI exposure, Mint Street officials may have likely considered SFB a better option.
(The writer is with The Hindu businessline)