Bandhan Bank has been imposed with a fine of Rs. 1 crore for not meeting the promoter holding norms.
RBI’s new guidelines of bank licensing dictate that Kolkata based Bandhan Bank’s financial promoter, Bandhan Financial Holdings Ltd. should reduce its stake 40%, within three months of commencing business, which the bank failed to do.
Bandhan Bank had recently launched the biggest IPO, which was valued at Rs. Rs 2500 crore, making it the biggest banking IPO launch in India.
Why is RBI imposing this fine on Bandhan Bank? Read on to find out more!
RBI Fines Bandhan Bank With Rs. 1 Crore For Not Slashing Promoter Shareholding
As per reports, the bank was expected to slash the shareholding of Bandhan Financial Holding Ltd., which is Bandhan bank’s non-operative financial holding company to 40 percent of its total paid-up voting capital. The bank was expected to do this within three months from commencement of business.
As they didn’t carry out what was expected of them, the bank was served a show cause notice, to which the bank did not come up with a satisfactory response.
RBI said that after mulling over the response offered by Bandhan Bank, “RBI came to the conclusion that the bank had failed to comply with the licensing guidelines read with the licensing conditions imposed by RBI and decided to impose monetary penalty on the bank.”
Apparently, this decision has been made after considering the submissions in the personal hearing, and documents that were submitted by Bandhan Bank.
Bandhan Bank Unsuccessfully Tried To Bring Down Shareholding of Promoter
However, the bank said that they have been trying to bring down the shareholding of the promoters to 40 percent. It hasn’t been long since the bank merged with Gruh Finance, which brought their shareholding down from 82.26 per cent to 60.96 per cent.
RBI has imposed this fine under the provisions open to them under the Banking Regulation Act, 1949, and has also clarified that this is not applicable to the validity of any transaction or agreement that the bank has with its customers.
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