Grapevine: Bandhan Bank mulls merger with holding company to comply with RBI rules
Photo Credit: VCCircle

Kolkata-based private-sector lender Bandhan Bank is considering reducing promoter stake by merging with its holding company Bandhan Financial Holdings, two people familiar with the plan told Moneycontrol. 

This is one of the ways under consideration and before taking any step the bank will wait for the outcome of a Reserve Bank of India (RBI)-appointed panel on holding company structure.

“The promoter currently holds 47% in the holding company. The merger of the bank with the holding company will straight away bring down the promoter stake to 24.9% in the bank,” said one of the persons quoted above.

Bandhan Financial Holdings still owns close to 61% stake in the bank, even after five years of its inception.

In September 2018, RBI imposed punitive action on Bandhan Bank, which included withdrawing permission to open branches and freezing the remuneration of the managing director and CEO.

The RBI’s decisions came after Bandhan Bank failed to bring down the shareholding of its non-operative financial holding company to 40% as required under the licensing condition.

Later, the RBI allowed the bank to open branches.

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