Bandhan bank to take offer-for-sale route to cut promoter's shareholding to 40%

Bandhan bank, which has been directed by the Reserve Bank of India to cut down its promoter's shareholding, has decided to reduce the same through the offer-for-sale (OFS) route. The bank further added that it is not looking at any more acquisitions now. The declaration was made during a press conference of the lender while announcing the results of March quarter. The bank reported a 67.8% increase in its March quarter net profit as a result of higher net interest and non-interest income. The bank managed to beat the analyst estimations and reported a net profit of Rs. 651 crores against Rs. 388 crores last year same period. As per a Bloomberg poll, the Analysts had expected a profit of Rs. 546.30 crore.

Announcing results of the first quarter of the current financial year, bank's CEO and MD said: "We cannot go for any further acquisition and the option is to have an offer for sale." He also added the bank is under process of getting the approval of authorities and expected to get the National Company Law Tribunal (NCLT) approval as well. "Now we need the approval of NCLT and whenever the approval comes, we will merge the entities. However, we cannot give a timeline for the NCLT approval," he said.

It is to be noted that the OFS mechanism was introduced by the market regulator, the Securities and Exchange Board of India (SEBI) in 2012 which allows the promoter of an entity to dilute their holdings in the listed company. The Kolkata-headquartered bank had announced the takeover of Gruh Finance, the affordable-housing finance arm of Housing Development Finance Corporation (HDFC), in a share swap deal. The deal would dilute the promoters holding of Bandhan Financial Holdings Ltd in the bank to 61% from 82% at present. Last month, the Competition Commission of India (CCI) approved the proposed takeover.

The deal was necessitated after the apex bank, in September last year, barred Bandhan Bank from expanding its branches without is approval. Moreover, RBI also ordered to freeze the salary of its CEO, Ghosh. As per RBI's latest bank licensing guidelines, Bandhan Financial Holdings Ltd, the bank's promoter had to cut down its stake from 82% to 40% within three years of commencing the operations. The deadline ended on 23 August 2018 for Bandhan Bank.

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