RBI lifts ban on Bandhan Bank network expansion after lender's efforts to comply with licensing conditions

  • The RBI in September 2018 had barred Bandhan Bank from expanding its network as the lender failed to reduce the promoters' stake to 40 percent

  • Currently, the promoters' holding in the bank is 62 percent

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

New Delhi: The Reserve Bank on Tuesday allowed Bandhan Bank to expand its branch network after considering the efforts made by the private lender to comply with the licensing conditions.

The central bank in September 2018 had barred Bandhan Bank from expanding its network as the lender failed to reduce the promoters' stake to 40 percent from close to 82 percent within the stipulated three-year time frame of commencing operations.

"We would like to inform that the Reserve Bank of India vide its letter dated 25 February, 2020 has informed that though the bank is still not in compliance with the licensing condition on dilution, considering the efforts made by the bank to comply with the said licensing condition," Bandhan Bank said in a regulatory filing.

 RBI lifts ban on Bandhan Bank network expansion after lenders efforts to comply with licensing conditions

Representational image. Reuters.

Currently, the promoters' holding in the bank is 62 percent.

The bank said RBI has lifted the regulatory restriction on branch opening, subject to the condition that the bank ensures that at least 25 percent of the total number of banking outlets opened during a financial year are opened in unbanked rural centres, it added.

Bandhan Bank had commenced operations on 23 August, 2015.

According to RBI's bank licence norms, a private sector bank's promoter will need to pare holding to 40 percent within three years, 20 percent within 10 years and 15 percent 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 percent from the previous close.

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Updated Date: Feb 26, 2020 07:19:55 IST