(Photo: Mint)
(Photo: Mint)

Bandhan Bank fined 1 crore over promoter holding norms

  • Bandhan Financial Holdings Ltd has to cut its stake from 82% to 40%
  • A notice was issued to the bank, advising it to show cause as to why penalty should not be imposed for non-compliance with the licensing guidelines

MUMBAI : The Reserve Bank of India (RBI) on Tuesday imposed a penalty of 1 crore on Bandhan Bank Ltd for failing to meet its promoter holding norms.

“RBI has, by an order dated 29 October, 2019, imposed a monetary penalty of 1 crore on Bandhan Bank Ltd for non-compliance with the guidelines on promoter holding contained in Guidelines for Licensing of New Banks in Private Sector dated 22 February, 2013 read with the conditions imposed by RBI in exercise of powers under section 22 of the Banking Regulation Act, 1949, at the time of issuing banking licence to the bank," the central bank said.

RBI said the bank was required to bring down the shareholding of its non-operative financial holding company in the bank in excess of 40% of the total paid-up equity capital to 40% within three years from the date of commencement of business of the bank.

As the bank failed to comply with these guidelines, a notice was issued, advising it to show cause as to why penalty should not be imposed for non-compliance with the licensing guidelines.

“After considering the reply received from the bank, submissions made by the bank during the personal hearing and the documents submitted by it, RBI came to the conclusion that the bank had failed to comply with the licensing guidelines read with the licensing conditions imposed by RBI and decided to impose monetary penalty on the bank," the banking regulator said.

According to RBI’s new bank licensing guidelines, the bank’s promoter, Bandhan Financial Holdings Ltd, had to cut its stake from 82% to 40% within three years of commencing business. The deadline for doing this was August 2018.

The Kolkata-based bank in January announced the acquisition of Gruh Finance Ltd, the affordable housing finance arm of Housing Development Finance Corp. (HDFC), in a share swap deal. The acquisition is expected to lower the promoter holding of Bandhan Financial Holdings in the bank from 82.26% at present to 61%.


This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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