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No Prior Permission Needed by Bandhan Bank To Open Branches: RBI

By LawStreet News Network      26 February, 2020 10:02 PM      0 Comments

As reported on 25th February, 2020, the Reserve Bank of India (RBI) has allowed Bandhan Bank to open its new branches and this will be subject to a condition that 25% of the new outlets opened in the financial year shall be in unbanked rural centers. 

In September 2018, RBI had not allowed the Bandhan bank to open any branches without prior approval. And had further ordered the bank to freeze the salary of its Chief Executive Chandra Shekhar Ghosh over the failure to meet the shareholding rules. In September 2018, RBI had said that Bandhan Bank cannot open new branches without prior approval. 

"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 atleast 25 % of the total number of 'Banking Outlets' opened during a financial year are opened in unbanked rural centers," the bank had stated this in a notification to the Bombay Stock Exchange. 

And on Tuesday, RBI reportedly lifted the restrictions placed thereon. The efforts made by the private lender to comply with the licensing conditions allowed the expansion of its branch network. 

The RBI's new licensing guidelines state that the bank's promoter Bandhan Financial Holdings Ltd, has to reduce the stakes to 40% within three years from the commencement of business.

On 26th February, 2020, the banks' shares jumped nearly 5% in the early market hours. On the Bombay Stock Exchange, the stock gained 4.8% to trade at Rs. 423.25 and on the National Stock exchange, the stock jumped 4.72% to Rs. 423. 

Author - Dyuti Pandya 

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