The Reserve Bank of India has barred Bandhan Bank from opening new branches without its prior approval after the private-sector lender failed to meet a key licensing condition.
The central bank has also frozen the salary of managing director and CEO Chandra Shekhar Ghosh at the existing level, Bandhan Bank said in a stock-exchange filing on Friday.
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.
As a result, the RBI has withdrawn the general permission to open new branches. The bank can, however, open new branches with prior RBI approval.
The bank said it is taking necessary steps to comply with the licensing condition.
Bandhan Financial Holdings Ltd had an 82.28% stake in Bandhan Bank at the end of June, according to stock-exchange data.
The bank counts Singapore sovereign wealth fund GIC Pte Ltd and International Finance Corporation, the private-sector investment arm of the World Bank, among its shareholders. GIC owned a 4.6% stake while IFC held 1.8% at the end of June.
Bandhan Bank was one of two lenders to get a banking licence from the RBI in 2014; IDFC Bank was the other. It launched its operations in August 2015.
The bank went public in March this year after an initial public offering that was covered 15 times. It made a spectacular debut on the stock markets, with its shares gaining 27% higher on the first day.
The bank’s shares closed nearly 1% down on Friday at Rs 564 apiece on the BSE, giving it a market value of 67,274 crore. The shares are still up 50% from the IPO price.