After being reprimanded by the Reserve Bank of India, the promoters of Bandhan Bank Ltd. have secured an exemption from the markets regulator on a rule which restricts the sale of promoter shares for one year after a company goes public.
Bandhan Bank listed on the bourses in March 2018. This meant that promoter shares would be locked-in until March 2019 according to guidelines of the Securities and Exchange Board of India. According to RBI rules, however, Bandhan Bank is required to bring down promoter shareholding to 40 percent within three years of starting operations. Last month, the RBI imposed restrictions on the bank for its inability to comply with these rules.
To move towards becoming compliant, Bandhan Bank has now been granted exemption from SEBI's rules.
...the bank has received an exemption from the Securities and Exchange Board of India with respect to lock-in of one year on the equity shares held by the promoter...Bandhan Bank Statement
The exemption will allow the bank more elbow-room in meeting the RBI's guidelines. In a conference call soon after the RBI imposed restrictions on Bandhan's expansion plans, the management said it is exploring a number of options. These include inorganic opportunities that would dilute promoter shareholding. The company could also consider reworking its holding company structure and redefining promoter entities.
Till the bank meets the RBI's restrictions, the bank has been stopped from opening new branches unless it seeks the regulator's approval each time. The remuneration of Managing Director and Chief Executive Officer Chandra Shekhar Ghosh has also been frozen.
The tough stance taken by the regulator in Bandhan's case was seen as a hint to Kotak Mahindra Bank, which too, is yet to comply with the RBI's promoter shareholding norms.
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