Bandhan Bank on Monday said the Reserve Bank of India (RBI) has lifted the regulatory restriction imposed on the remuneration of its managing director and CEO Chandra Shekhar Ghosh, as the holding company brought the shareholding in the bank to 40% to comply with licensing conditions earlier this month.
The private sector bank’s holding company, Bandhan Financial Holdings (BFHL), on August 3 diluted 20.95% equity shares in the lender to bring its shareholding to 40% through a secondary market sale for meeting RBI’s licensing conditions. BFHL raised around Rs 10,600 crore by selling its 33,73,67,189 equity shares in the lender to domestic and overseas investors, including BlackRock, Singapore’s GIC, Temasek and SBI Mutual Fund.
The Kolkata-based bank, in a stock exchange filing on Monday, said, “The RBI vide its communication dated August 17, 2020 has lifted the other regulatory restriction “the remuneration of the MD & CEO of the Bank stands frozen, at the existing level”.
“Consequent to the above, all the regulatory restrictions imposed by the RBI vide letter dated September 19, 2018, on the bank are now withdrawn,” it added.
The bank’s scrip fell 0.31% to end the day at Rs 287.30 on the BSE. The lender made the announcement after normal trading hours.
Coming down heavily on Bandhan Bank for not being able to bring down the promoter holding to 40% in three years, the RBI in September 2018 had barred the bank from opening new branches and also frozen the remuneration of Ghosh at the existing level.
According to RBI’s new banking licensing norms, any bank offering ‘universal’ services will have to bring down the promoter holding to 40% in three years from the date of commencement of business.
The acquisition of affordable housing finance company Gruh Finance in October 2019 had brought down the promoter holding of BFHL in the bank to around 60.95% from 82.26% earlier.
Considering the progress of the dilution of excess shareholding of NOHFC (BFHL) in the bank, the RBI in February 2020 had withdrawn the restriction imposed for obtaining its prior approval for opening of banking outlets.