India cenbank appoints director on Bandhan Bank's board (updated)

Bandhan Bank

25/06/2024 06:18

(Updates with source input, analyst comment, share price)
    By Siddhi Nayak
       MUMBAI, June 25 (Reuters) - India's central bank has
appointed a director on the board of Bandhan Bank  BANH.NS , the
private lender said in a notification to exchanges late on
Monday.
    Arun Kumar Singh, a chief general manager at the Reserve
Bank of India, will act as additional director of Bandhan Bank
for one year from June 24, the lender said.
    The central bank and the lender did not specify the reason
for the decision.
        India's central bank has the power to appoint directors
on bank boards under the Banking Regulation Act and typically
does so to increase oversight of a lender's operations.
    "The main purpose to appoint an additional director was to
ensure smooth management transition," a source familiar with the
central bank's thinking said on Tuesday.
    The RBI wanted to be a part of Bandhan Bank's board and
decision-making process, especially "when things are not very
rosy for the bank", the source said, without offering more
details.
    The source did not wish to be identified because he was not
authorised to speak with the media. 
    The RBI did not immediately respond to a Reuters' email
seeking comment.
    Bandhan Bank is set to see a management transition as
Managing Director and CEO Chandra Shekhar Ghosh retires on July
9 after spending nearly a decade at the helm.
    The RBI has yet to approve a name for the CEO's post and the
process is underway, the source said. 
    Shares of the Mumbai-listed Bandhan Bank fell 4.4% in early
trade on Tuesday, but pared losses to trade down 1.4%.
    Macquarie analyst Suresh Ganapathy said in a note that while
he expects Bandhan's stock to fall in the near-term, the RBI's
move "is more of a prudent measure".
    Bandhan Bank reported a 93% drop in net profit in the three
months to March 31, as it wrote-off bad loans and made
provisions for potential non-performing loans.
    The bank had in January disclosed that a set of loans it
gave out during the COVID-19 pandemic under a government-backed
scheme were being examined by the National Credit Guarantee
Trustee Company, an agency set up by the government to cover
defaults by small businesses.

 (Reporting by Siddhi Nayak; Editing by Janane Venkatraman and
Mrigank Dhaniwala
)
 ((Ira.Dugal@thomsonreuters.com; +91-9833024892;))