Bandhan Bank to continue with its holding company

"We as a group want to be a full-service institution and aim to provide customers financial products such as insurance and mutual funds, besides banking service. The holding company would fit well in our future endeavour," Bandhan founder Chandra ...

Kolkata: Bandhan Bank said it would continue with its holding company, ending speculations that the bank might exit from the structure if Reserve Bank of India relaxes the rules and makes it optional.

"We as a group want to be a full-service institution and aim to provide customers financial products such as insurance and mutual funds, besides banking service. The holding company would fit well in our future endeavour," Bandhan founder Chandra Shekhar Ghosh told ET.

The bank plans to take the subsidiary route for its proposed insurance and mutual fund foray.


The Reserve Bank of India's working group on private bank ownership has last week proposed to allow banks, which currently under non-operative financial holding company (NOFHC), exit from such a structure if they do not have other group entities in their fold.

At present, Bandhan Financial Holdings has no other entity under its fold other than Bandhan Bank.

"In no circumstances, we are going to exit the structure," Ghosh said.
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Bandhan follows a three-tier system with Bandhan Financial Services at the top of it as the holding company of Bandhan Financial Holdings, which in turn, is the NOFHC of the bank.

It may be recalled that Bandhan management did think of a merger between its holding company and itself, when it was weighing options on how to reduce promoter holdings to 40% to comply with RBI rules. Bandhan Financial Holdings in August eventually sold its shares in the bank to investors to meet promoter holding norm.

The RBI working group said NOFHCs should continue to be way forward for all new universal bank licenses. However, NOFHC may be mandatory only in cases where the individual promoters / promoting entities / converting entities have other group entities.

The RBI group also said that concerns with regard to banks undertaking different activities through subsidiaries/joint ventures /associates need to be addressed through suitable regulations till the NOFHC structure is made feasible and operational.
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"The Reserve Bank may frame suitable regulations in this regard inter alia incorporating the following and the banks must be required to fully comply with these regulations within a period of two years," it said.
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