RBI withdraws new branch permission & freezes compensation of MD & CEO of Bandhan Bank

The Reserve Bank of India (RBI) has frozen the remuneration of Bandhan Bank chief executive officer and managing director Chandrashekhar Ghosh for not complying with the promoter shareholding norms. Bandhan Bank also cannot open new branches without the regulator's permission.

"RBI has communicated to us that since the Bank was not able to bring down the shareholding of Non Operative Financial Holding Company (NOFHC) to 40 percent as required under the licensing condition, general permission to open new branches stands withdrawn and the Bank can open branches with prior approval of RBI and the remuneration of the MD & CEO of the Bank stands frozen at the existing level, till further notice," Bandhan Bank informed the stock exchanges.

The bank is taking necessary steps to comply with the licensing condition to bring down the shareholding of NOFHC in the Bank to 40 percent and shall continue to engage with RBI in this behalf, it added.

RBI’s licensing norms require a private sector bank to bring down its promoter shareholding to 40 percent within three years of operations.

Previously a microfinance institution, Bandhan Bank is one of the youngest private sector banks in India, completing three years on August 23. Bandhan went for an initial public offering (IPO) in March this year, which resulted in the promoter holding falling to 82.28 percent from 89.62 percent.

Recently, the bank failed in concluding talks to acquire PNB Housing Finance, which could have helped in bringing down the promoter holding.