Bandhan Bank tanks 12% post block deal

Share of micro lender Bandhan Bank tanked nearly 12% on the BSE to Rs 304 post a block deal on the BSE, which saw 345.6 million shares changing hands. The details of the buyers and sellers in the block deal are not known.
Bandhan Financial Holdings, the main shareholder of Bandhan Bank, was expected to sell 337.4 million shares or 20.95 per cent stake worth $1.4 billion (Rs 10,500 crore) in the bank through a block deal to meet RBI’s shareholding norms. Bandhan Financial Holdings held 60.95% stake in the bank prior to the block deal.
Last year, the Reserve Bank of India (RBI) did not allow Bandhan Bank to open new branches, citing the promoter ownership threshold applicable to banks. The central bank also ordered a freeze on the salary of the managing director and CEO, Chandra Shekhar Ghosh.

The bank has about 1,100 branches and its expansion is linked to the end to the regulatory bar.
The RBI’s bank licence rules state that promoters of private banks should cut their shareholding to 40% within three years and 20% in 10 years

In Q1FY21 Bandhan Bank reported a reasonable performance. Moratorium improved from 71% in April to 24% as of July 3, 2020 with micro finance portfolio down from 100% in April 2020 to 30%.

Similarly AUM growth decelerated to 17.7% YoY to Rs 74331 crs (Rs 71846 crs in Q4FY20). Healthy traction continued in micro finance segment (62% of AUM) at 21.2% YoY to Rs 47478 crs while non-micro finance growth came lower at 12% YoY. Disbursement saw a healthy revival across portfolio with micro finance seeing traction QoQ at Rs 2859 crs down 30% YoY

Customer addition remained slowest at 2.13 lakh in Q1FY21, taking total customer base to 2.03 crs. Deposit accretion continued to remain healthy at 35% YoY to Rs 60610 crs with 24 bps QoQ improvement in CASA ratio to 37.08%.

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