Bandhan Bank on Monday said that the Reserve Bank of India (RBI) has withdrawn the restrictions placed on its CEO's remuneration after the promoter reduced stake in the private sector lender. The bank's main shareholder Bandhan Financial Holdings Limited (BFHL or NOFHC) cut the stake in the lender to 40 per cent from around 61 per cent earlier.
"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," the bank said in a filing to the Bombay Stock Exchange.
On August 3, the bank's promoter sold Rs 10,500 crore worth of equity stake in the private sector lender through a block deal. The deal involved selling 33.74 crore shares, or 20.95 per cent stake, in the lender at a floor price of Rs 311 per share. The stake sale was a part of the lender's effort to bring down promoter shareholding to meet the central bank's regulatory norms.
As per RBI's new bank licensing norms, banks have to lower the promoter holding to 40 per cent within three years from the date of commencement of business. The Kolkata-based Bandhan Bank started operations as a universal bank on August 22, 2018.
Initially, Bandhan Bank's promoter holding was actually holding 82 per cent shareholding in the bank. The holding came down to 61 per cent in January 2019 after the bank acquired HDFC-owned Gruh Finance in a stock-swap deal.
In September 2018, the central bank had imposed monetary fine of Rs 1 crore on Bandhan Bank as it had failed to bring down the holding company's stake to the prescribed level by the said time frame.
Meanwhile, shares of Bandhan Bank ended Monday's trade at Rs 287.30, down 0.31 per cent, against the previous closing price of Rs 288.20 on the BSE.
By Chitranjan Kumar