Shares of private sector lender Bandhan Bank tanked on Monday after the Reserve Bank of India (RBI) decided to freeze the remuneration of its chief executive officer and managing director and curbed branch expansion after the lender was unable to meet licensing norms on bringing down promoter’s stake.
Bandhan Bank was locked at its lower circuit of 20% on Monday with the shares shedding ₹112.80 to close at ₹451.20. In August, the shares of Bandhan Bank had touched a 52-week high of ₹741 and since then, has lost almost 40%.
This is much higher than the fall in the benchmark Sensex, which lost less than 4% in the same period.
According to licensing norms, Bandhan Bank was mandated to reduce promoter shareholding to 40% within three years of starting operations. However, the promoter of Bandhan Bank, which is Bandhan Financial Holdings, still holds over 80% even after three years of operations. The bank started operations from August 23, 2015.
Kotak Mahindra Bank
Another private sector lender Kotak Mahindra Bank, which also pared promoters’ stake to 20% from about 30% by December 2018, was also down more than 12% during the morning session but managed to recoup most of the losses.
The shares of the private sector lender touched an intra-day low of ₹1,002.30, before closing at ₹1,124.45, down 1.67% or ₹19.05 compared to Friday's close of ₹1,143.50.