The central bank of India has lifted branch expansion restrictions on the country’s private sector lender Bandhan Bank.
The bank has now secured the nod of the Reserve Bank of India (RBI) to launch branches without prior approval.
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Plans are on to set up 250 new branches by March this year.
The restrictions were lifted on the condition that a minimum of 25% of the branches launched in a financial year will be located in unbanked rural centres.
RBI stressed that Bandhan Bank still does not meet the licensing conditions on dilution of promoter stake.
However, the restrictions were ended “considering the efforts made by the Bank to comply with the said licensing condition”, the central bank said.
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By GlobalDataCurrently, Bandhan Bank has 1,100 branches and 3,084 doorstep banking centres.
Background
The Reserve Bank of India (RBI) imposed restrictions on the branch expansion of the bank in 2018 after it failed to lower promoter’s stake to 40% within the deadline.
Citing non-adherence to shareholding rules, the central bank also ordered the bank to freeze the salary of its CEO Chandra Shekhar Ghosh.
Soon, the bank initiated certain measures to reduce the promoter stake, following which it obtained the green light from the central bank to set up 40 new branches.
In line with this strategy, Bandhan Bank signed an agreement to buy HDFC Bank’s home loan subsidiary Gruh Finance.
The takeover, completed in October 2019, reduces promoter’s stake from 82.3% to around 60%.
