Bandhan Bank shares surged over 6 per cent in early trade on Thursday as the Reserve Bank of India allowed Bandhan Bank to open as many as 40 new branches, the first time since it put a restriction on the bank's branch opening spree three months back.

"We had sought licences to open 40 branches and the regulator has approved it," Bandhan Bank Managing Director Chandra Shekhar Ghosh told ET.

RBI had come down heavily on Bandhan Bank in the last week of September for its failure to bring down promoters' stake to 40 per cent as per the licensing agreement. The regulator had barred the bank from opening branches without prior approval and froze Ghosh's remuneration at the existing level.

Bandhan Financial Holdings (BFHL) is owned by Bandhan Financial Services (BFSL). The promoter holding in the bank currently stands at 82.28 per cent.

As per the RBI’s licensing norms, promoter holding should be brought down to 40 per cent within three years of starting operations. Bandhan Bank, which had started operations in August 2015, should have brought down the promoter holding by August 2018.

But the bank, which floated an IPO in March 2018, could not have pared promoter stake due to the SEBI mandate of a one-year lock-in on shares held by the promoter post an issue. In October, the bank received an exemption from SEBI to help it comply with the requirements of RBI’s licensing guidelines.

The Bandhan Bank scrip was 6.40 per cent up at Rs 503.65 at around 09.23 am while the benchmark BSE Sensex rose 0.59 per cent to 35,991.92. It opened at Rs 489.80 on the BSE against its previous closing of Rs 473.35.