Sebi eases promoter stake lock-in norm for Bandhan Bank
Sebi exempting Bandhan Bank from the one-year promoter shareholding lock-in rule seen helping Bandhan Financial Holdings Ltd pare holdings to comply with RBI rules
Mumbai: Bandhan Bank Ltd on Friday said the Securities and Exchange Board of India (Sebi) has exempted it from the one-year promoter shareholding lock-in rule.
This will allow its promoter, Bandhan Financial Holdings Ltd (BFHL), to bring down its holding from the current 82.28% to 40% to comply with Reserve Bank of India’s (RBI) norms.
Analysts believe that despite Sebi’s leeway, the bank will find it difficult to reduce promoter holding to 40% in one go.
“It will not be easy for the bank to cut promoter holding so soon and the RBI might allow the bank some more time to gradually bring it down to 40% once Bandhan initiates the sale process,” said Anusha Raheja, banking, financial services and insurance (BFSI) analyst, LKP Securities.
On Wednesday, the bank’s managing director and chief executive officer (CEO) Chandra Shekhar Ghosh said the lender will soon submit its plan to bring down promoter holding in the bank.
“The options available to us are offering for sale (OFS), where the non-operative financial holding company (NOFHC) dilutes, doing a merger and acquisition, and depending upon business requirement we are looking at primary or secondary fund raising,” Ghosh said.
Asked about the bank’s progress in bringing down the promoter shareholding to 40%, Ghosh had said, the bank is “continuously engaging with RBI. We have a plan which we will submit to RBI”.
According to the RBI’s new bank licensing guidelines, the bank’s promoter, Bandhan Financial Holdings Ltd, has to reduce its stake within three years of commencing the business.
The deadline for Bandhan Bank was 23 August, 2018. Thereafter, the bank is required to reduce its promoter shareholding to 20% and 15% within 10 years and 12 years, respectively.
While under RBI rules Bandhan had to cut promoter shareholding to 40%, Sebi norms did not allow the promoter to sell shares within a year of the initial public offering (IPO).
Bandhan Bank’s IPO took place in March this year.
Last month, the RBI barred Bandhan Bank from opening new branches without its approval and ordered the bank to freeze Ghosh’s salary over the bank’s failure to meet shareholding rules.
Ghosh did not respond to a call and a text message seeking his comments.
The private sector lender told the stock exchanges on Friday: “In continuation of our intimation dated 28 September, 2018, it is hereby informed that 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; and eligibility condition of one year from listing… to comply with the requirements of RBI licensing guidelines for private sector banks issued on 22 February, 2013.”
According to an Edelweiss Securities’ note after the bank’s analyst call last month, the management had ruled out any secondary issuance till March 2019 as promoters need to comply with the one-year lock-in period requirement as part of its listing norms.
On the analyst call, the bank’s management had spoken of the option to dissolve the holding company structure, a condition laid down at the time of applying for the banking licence.
Bandhan Bank has a three-layered structure with Bandhan Financial Services holding 100% stake in Bandhan Financial Holdings, which is the non-operative financial holding company and is also the promoter of Bandhan Bank with an 82.28% stake.
The bank was issued a universal banking licence under the Reserve Bank of India’s 2013 guidelines for licencing of new private sector banks, under which a promoter was required to hold the bank through a non-operative financial holding company.
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