Bandhan Bank gets RBI relief on opening of branches, subject to conditions

The bank has been allowed to open new branches, provided 25% of all new banking outlets opened in a financial year are in unbanked rural centres

The Reserve Bank of India had lifted the “regulatory restriction” on opening of branches by Bandhan Bank, provided the bank ensured at least a quarter of all banking outlets opened by it during a financial year were in unbanked rural centres, Bandhan Bank informed stock exchanges on Tuesday.

The restriction had been imposed on the bank for failing to comply with the licensing condition on dilution of stake.

The bank said in a statement to BSE and the National Stock Exchange: “Further to our letter dated September 28, 2018, we would like to inform that the Reserve Bank of India vide its letter dated February 25, 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, it has lifted the regulatory restriction on branch opening, subject to the condition that the Bank ensures that at least 25 per cent of the total number of 'Banking Outlets' opened during a financial year are opened in unbanked rural centres.

The central bank had barred Bandhan Bank in September 2018 from expanding its network as the lender had failed to reduce promoter stake to 40 per cent from close to 82 per cent within the stipulated three years from the time of commencing operations. Bandhan Bank had commenced operations on August 23, 2015. At present, promoters' holding in the bank is 62 per cent.

According to RBI's bank licence norms, a private sector bank's promoter needs to pare holding to 40 per cent within three years, to 20 per cent within 10 years, and to 15 per cent within 15 years.

Bandhan Bank currently has 4,288 banking outlets, including branches. Its shares on Tuesday closed at Rs 403.85 on BSE, down 1.15 per cent from previous close.