Bandhan Bank stuck in lower circuit post RBI action

The newbie banking stock hit its lower circuit limit of 20 per cent after the RBI froze Bandhan's MD’s and CEO’s salary and also prohibited the company from opening new branches.

The bank was required to scale down the shareholding of non-operative financial holding company (NOFHC) to 40 per cent, as mandated by RBI's licensing condition. Bandhan Bank’s shareholding of NOHFC stood at 82.28 per cent as on June 2018. Its failure to pare it down to 40 per cent resulted in the revocation of permission to open new branches, without prior approval from the central bank.

In a press release, the bank asserted that it is doing the needful to bring down the shareholding to the stipulated levels and will continue to engage with the RBI in this matter. This includes contemplating inorganic opportunities in MSME finance and affordable housing finance. It also stated that the restriction on opening new branches will not hinder the lender’s growth.

On Monday, the shares of Bandhan Bank opened at a price of Rs. 470 per share and hit a high and low of Rs. 484.90 per share and Rs. 451.20 per share, respectively. At 10:23 am, the stock was trading at Rs. 451.20 per share, down 20 per cent.