Additional director on Bandhan Bank is prudent measure by RBI: Macquarie

On Monday, RBI inducted an additional director on the board of Bandhan Bank - Arun Kumar Singh, former chief general manager of RBI

The Reserve Bank of India’s decision to appoint an additional director to the Bandhan Bank board is a prudent measure and will ensure the proper functioning of the lender, broking firm Macquarie said in a latest note.

On Monday, the regulator inducted an additional director on the board of Bandhan Bank – Arun Kumar Singh, former chief general manager of RBI, weeks before the current managing director and chief executive officer Chandra Shekhar Ghosh’s retirement.

In a surprise move in April this year, Ghosh announced his retirement with effect from July 9. The decision was taken even after the Bandhan board approved his extension for three years in November last year.

“RBI yesterday appointed an additional director on the board of Bandhan Bank for a period of one year. The current managing director and chief executive officer, C S Ghosh, was slated to retire on July 9, and RBI has yet to approve a new chief executive officer. Hence, we believe this is an interim measure taken by RBI to ensure the proper functioning of the bank,” the broking firm said.

Sources said the move by RBI to induct an additional director was to assist in an orderly and smooth transition and to support board oversight while adding there are no other material concerns with the bank currently.

Notably, unlike in RBL Bank or Ujjivan, RBI appointed a retired official for a shorter tenure in Bandhan.

Macquarie said there are not sufficient internal candidates in the bank who have served the bank for a long time at board level to be eligible for the chief executive officer position.

Apart from Ghosh, Bandhan Bank has two wholetime directors – executive directors Ratan Kumar Kesh and Rajinder Kumar Babbar.

Babbar was appointed in March this year while Kesh was appointed in March 2023.