Category: Banking & Finance

RBI nod for Ghosh’s re-appointment as Bandhan Bank MD and CEO for three years, BFSI News, ET BFSI

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Bandhan Bank has received RBI nod to re-appoint Chandra Shekhar Ghosh as its MD and CEO for three years, lower than the five-year tenure approved by the company’s board in November last year. “The Reserve Bank of India vide its communicated dated June 8, 2021, has granted approval for re-appointment of Chandra Shekhar Ghosh, Managing Director & Chief Executive Officer (MD&CEO) of the bank, for a period of three years, with effect from July 10, 2021,” the lender said in a regulatory filing on Tuesday.

On November 2, 2020, the board of the bank had approved re-appointment of Ghosh as the MD and CEO for a period of five years with effect from July 10, 2021, subject to approval of the RBI and shareholders.

Ghosh’s current term comes to an end on July 9, 2021.

With 30 years of experience in microfinance and development, Ghosh had set up Bandhan as an NGO in April 2001 and it was converted into an NBFC later.

Subsequently, it was established as a universal bank in August 2015 after getting licence from the RBI.

The Kolkata-headquartered lender earlier in September 2018 was barred by the RBI from expanding its branch network. The RBI had also freezed Ghosh’s remuneration as the lender failed to comply with a licensing condition that required cutting down promoters’ stake to 40 per cent, from close to 82 per cent, within three years of commencing operations.

The restrictions on expansion were lifted in February 2020 by the RBI even as the bank was not in compliance with the licensing condition, given the efforts made by the lender to comply with the guidelines. It had reduced the promoters’ stake to 62 per cent by then.

RBI had lifted the regulatory restriction on branch opening, on the condition that the bank ensured that at least 25 per cent of the total number of banking outlets opened during a financial year were in unbanked rural centres.

The curbs on Ghosh’s remuneration were lifted in mid-August 2020.

According to RBI’s bank licence norms, a private sector bank’s promoter will need to pare holding to 40 per cent within three years, 20 per cent within 10 years and to 15 per cent within 15 years.

Bandhan had merged with mortgage lender HDFC’s low-value home loan company Gruh Finance in order to reduce the promoter ownership to the 60 per cent level from the earlier 82 per cent.

Bandhan is the first bank in India which has been transformed from a microfinance institution.

As of March 31, 2021, the promoter and promoter group shareholding in Bandhan Bank stands reduced to 39.99 per cent, as per data on BSE.



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Bank of Baroda to sell 46 NPA accounts to recover Rs 597 cr, BFSI News, ET BFSI

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NEW DELHI: State-owned Bank of Baroda will conduct an e-auction of as many as 46 NPA accounts later this month to recover dues of Rs 597.41 crore.

The lender, in a notification, said it intends to sell these NPA accounts to asset reconstruction companies (ARCs) / banks / NBFCs or other financial institutions (FIs) on 100 per cent cash basis, for which the e-auction will take place on June 21, 2021.

The major NPA accounts put up for sale include Meena Jewels Export & Meena Jewellers Export (Rs 60.76 crore); Crystal Cable Industries (Rs 57.49 crore); J R Foods Ltd (Rs 41.60 crore); Shree Raghuvanshi Fibres (Rs 27.38 crore); Kaneri Agro Industries (Rs 24.69 crore); Man Tubinox (Rs 24.28 crore) and Aryans Educational and Charitable Trust (Rs 20.79 crore).

The last date for submission of expression of interest is June 19, the bank said, adding the completion of due diligence will take place on the same day.

“E-bidding timings will be from 11.30 AM to 12.30 PM with unlimited extension of 5 minutes in case the amount is increased by the bidders. The incremental amount shall be in multiple of Rs 10 lakh,” Bank of Baroda said.

With respect to Chennai-based Rahima Leather Exports against which there is an outstanding of Rs 9.13 crore, Bank of Baroda said it has received an ECGC claim of Rs 1.18 crore.

This account will be retained by the bank and not be passed on to ARC/NBFC/bank/FIs, it said.

Bidder will also have to give an affidavit that they are “in no way connected to or acting on behalf of or in concert or on behalf of any of the accounts or its promoters, including promoter’s family”, as per the provisions of Insolvency and Bankruptcy Code (IBC), 2016, it said.

The bank said any ECGC/CGTMSE claim received or to be received in any of the accounts under the sale will be retained by it and will not be passed on to ARCs/ banks/ NBFCs/ FIs.

The Export Credit Guarantee Corporation (ECGC) is a government owned body which provides export credit insurance support to Indian exporters.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government owned trust which offers credit guarantee to financial institutions which give loans to the MSME sector.



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RBI imposes Rs 2 lakh penalty on Dhrangadhra People’s Co-op Bank, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) on Tuesday imposed a penalty of Rs 2 lakh on Dhrangadhra People‘s Co-operative Bank, Surendranagar, Gujarat, for non-compliance with certain norms. The RBI said the penalty has been imposed for non-compliance with RBI directions on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Depositor Education and Awareness Fund Scheme 2014’.

Giving details, the RBI said the statutory inspection of the bank conducted by it with reference to the bank’s financial position as on March 31, 2018, and the inspection report thereto, revealed, inter alia, non-compliance with the directions.

Subsequently, a notice was issued to the Dhrangadhra People’s Co-operative Bank.

“After considering the bank’s reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the aforesaid charges were substantiated and warranted imposition of monetary penalty,” the RBI said.

The central bank added that the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.



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Carlyle-led investment in PNB Housing unfair to minority shareholders, says proxy firm

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The stock price of PNB Housing Finance rose 94% in a week to Rs 852.20 at Bombay Stock Exchange (BSE).

Proxy advisory firm Stakeholders Empowerment Services (SES) said on Tuesday that the proposed preferential issue by PNB Housing Finance is against the interest of public shareholders, PNB shareholders and the government.

In a note to institutional investors, the proxy firm, headed by former Sebi ED JN Gupta, has argued that a rights issue would have been a fairer and better option for raising capital. SES has recommended PNB Housing’s public shareholders to cast their votes against the resolution on preferential allotment.

“In absolute terms existing retail shareholders are getting diluted by 5.83%, in relative terms there is a dilution of almost 34%,” SES said.

“The shareholders owning close to 85% shares, either decided to take preferential offer or voluntarily gave their rights/sacrificed (i.e. PNB),” SES said, adding that people in control ignored existence of minority shareholders. “On the face of it, SES finds this deal unfair to public shareholders of the company and shareholders of PNB. As a controlling shareholder of the company, PNB has blown away the value,” it said in a note.

The housing financier had earlier called an extraordinary general meeting (EGM) on June 22 to take approval of shareholders on the proposed capital raising. Last week, PNB Housing’s board approved preferential allotment of Rs 3,200 crore worth of shares and Rs 800 crore worth of warrants to Carlyle, Aditya Puri’s family investment vehicle Salisbury Investments, General Atlantic and Alpha Investments at Rs 390 per share.

The lender also said Aditya Puri was likely to be nominated to the firm’s board as a Carlyle nominee director. The transaction will also trigger an open offer to acquire 26% from the public as per Sebi norms. The open offer will be made at Rs 403 per share.

“The open offer is a mere formality given the present market price. It is highly unlikely that any shareholder would tender their shares,” SES said. The stock price of PNB Housing Finance rose 94% in a week to Rs 852.20 at Bombay Stock Exchange (BSE).

Some of the experts also believe the preferential issue by PNB Housing Finance is not detrimental to investors.

Amit Tandon, founder and managing director (MD) of Institutional Investor Advisory Services (IiAS), said, “The transaction is not detrimental to investors per se. But since the price of the share has run-up, the deal structure is now being questioned.” The price of the share has moved up because Aditya Puri, former MD of HDFC Bank, has invested and is joining the board, he added

SES has, however, also raised concern over the dilution of retail shareholders’ equity after the preferential issue by PNB Housing Finance. Post the capital infusion, PNB’s holding will drop to 20%, while Carlyle group firms stake will increase to 50%. Currently, PNB holds a 33% stake in PNB Housing and Carlyle firms hold 32% in the mortgage lender.

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RBI gives approval to re-appointment of CS Ghosh as MD & CEO of Bandhan Bank for three years

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Notably, the Kolkata-based private sector lender started operations on August 23, 2015, and it was the first instance of a microfinance entity transforming into a universal bank in India.

The Reserve Bank of India has granted approval for re-appointment of Chandra Shekhar Ghosh, MD and CEO of Bandhan Bank, for a period of three years.

The RBI vide its communication dated June 8 has granted approval for re-appointment of Ghosh for a period of three years, with effect from July 10, 2021, Bandhan Bank said in a stock exchange filing. “The re-appointment as above is subject to the approval of shareholders at the ensuing annual general meeting of the bank,” the filing read.

Notably, the Kolkata-based private sector lender started operations on August 23, 2015, and it was the first instance of a microfinance entity transforming into a universal bank in India. The board of directors of the bank at its meeting held November 2, 2020 approved the re-appointment of Ghosh as the MD & CEO of the bank for a period of five years with effect from July 10, 2021, subject to approval of the RBI and the shareholders.

Ghosh, who has been one of foremost proponents of microfinance in India, founded Bandhan in 2001 as a not-for-profit enterprise that stood for financial inclusion and women empowerment through sustainable livelihood creation. He was on the forefront of its transformation into an NBFC-MFI and finally the universal bank.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

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RBI approves re-appointment of GC Chaturvedi as part-time chairman of ICICI Bank

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The Reserve Bank of India has approved the re-appointment of Girish Chandra Chaturvedi as the part-time Chairman of ICICI Bank for a period of three years starting July 1, 2021.

“The shareholders at the Annual General Meeting held on August 14, 2020 had already approved the re-appointment of Girish Chandra Chaturvedi as non-executive (part-time) Chairman of the Bank for a period of three years effective from July 1, 2021,” ICICI Bank said in a regulatory filing on Tuesday.

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Franklin Templeton to move SAT against SEBI order

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Franklin Templeton and its top executives have decided to move the Securities Appellate Tribunal against SEBI’s order that banned the company from launching any new debt schemes for two years in addition to imposing a fine of ₹5 crore on the fund house.

“We strongly disagree with the findings in the SEBI order and intend to file an appeal with the Securities Appellate Tribunal,” said Franklin Templeton spokesperson on Tuesday.

“We place great emphasis on compliance. The decision by the Trustee in April 2020 to wind up the funds was due to the severe market dislocation and illiquidity caused by the Covid pandemic and was taken with the sole objective of preserving value for unitholders,” said the spokesperson.

On Monday, SEBI asked FT AMC to return nearly ₹460 crore it had collected as management and advisory fees from the investors in the six debt schemes since June 2018 with 12 per cent interest. SEBI had found serious lapses in the way Franklin Templeton India mutual fund had managed the debt funds that were wound up suddenly last April. Additionally, SEBI imposed a penalty of ₹5 crore on Franklin Templeton India AMC for violating various SEBI rules. SEBI also levied a penalty of ₹7 crore.

Also read: SEBI bans Vivek Kudva, Roopa Kudva for one year from market in FT case

‘Trustee vindicated’

The company said the amount repaid to investors so far ranges between 40 per cent and 92 per cent of AUM across the six schemes. The current net asset value of each of the six schemes is higher than what it was on April 23 last year. “We believe this supports the decision made by the Trustee in consultation with the AMC and its investment management team to wind up the six schemes,” the spokesperson said.

These schemes provided an important source of funding to growing companies in India that to date have proven to be sound investments. Many of these holdings are now being liquidated by the schemes at fair value under normal market conditions, said the spokesperson.

Kudva mulls next move

Vivek Kudva, Head of Franklin Templeton Asia-Pacific, is also likely to move SAT against the SEBI order that found him and his family members guilty of violating the Prevention of Fraudulent and Unfair Trading Practices.

Kudva has claimed that he has already set aside the proceeds from the sale of units and will not enjoy more than what other investors in the scheme get after the closure of the schemes. “I am reviewing the order and considering appropriate next steps which may include filing an appeal before the SAT,” said Kudva.

“I have always acted in accordance with SEBI regulations, including in this instance. My personal transactions in the two schemes (under wind-up proceedings) have been conducted with no intent to gain an unfair benefit,” he added.

 

 

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63 Moons to challenge NCLT nod to Piramal’s DHFL buy

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63 Moons Technologies on Tuesday said it plans to challenge the order of the National Company Law Tribunal (NCLT) approving Piramal Group’s resolution plan for Dewan Housing Finance Corporation.

“63 Moons believes that the current resolution plan is contrary to law and against the interest of all DHFL’s creditors, including non-convertible debenture holders,” it said in a statement.

The move comes a day after the Mumbai Bench of the NCLT approved the Piramal Group’s ₹37,250 crore resolution plan for DHFL, subject to certain conditions.

NCD holders disappointed

63 Moons holds over ₹200 crore of NCDs of DHFL. It had earlier filed an application in theNCLT, Mumbai seeking that the fraudulent transaction recovery benefit of about ₹45,000 crore filed by the DHFL administrator should come to creditors, including NCD holders and not to the buyer of the company.

“The current resolution plan is disappointing for NCD holders in as much as they stand to bear the greatest loss as opposed to any other party involved. Other members of the Committee of Creditors, which comprise mainly banks, have recourse to personal guarantees of promoters whereas NCD holders do not have any such contractual recourse,” it added. The statement added that NCD holders will be left high and dry with haircut of 65-75 per cent if, in future, such recoveries from fraudulent transactions are allowed to pass through to the resolution applicants, instead of the creditors.

“63 Moons is awaiting for the copy of the order and will be reviewing its options on the basis of advice from its legal advisors,” it said.

Another challenge

Fixed-deposit holders of DHFL are also planning to challenge the NCLT order in NCLAT as they want 100 per cent re-payment.

63 Moons said the Resolution Plan is drafted in such a way that it favours the resolution applicant or Piramal Group.

“Ascribing a value of ₹1 to the recoveries of fraud where claims are in excess of ₹45,000 crore creates unjust enrichment of the buyer (Piramal) at the cost of creditors,” it said, adding that Piramal has bid only for the current value of DHFL, which does not include these amounts that were taken away fraudulently.

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RBI Dy Governor Mahesh Jain gets two-year extension

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The Appointments Committee of the Cabinet on Tuesday approved the re-appointment of Mahesh Kumar Jain, Deputy Governor, Reserve Bank of India (RBI), for two years with effect from June 22.

It may be recalled that Jain’s three-year term as RBI Deputy Governor is due to get completed on June 21.

With the re-appointment of Jain, the Centre has stuck to the tradition of having a commercial banker occupy the post of RBI Deputy Governor (reserved for bankers). As a result, the central bank now has four serving RBI Deputy Governors. The other three serving deputy governors are Michael Patra, M Rajeshwar Rao and Rabi Sankar.

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Canara Bank donates 50 oxygen concentrators

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Canara Bank, a public sector bank, has donated 50 oxygen concentrators and made a ₹1 crore contribution to the Karnataka Chief Minister’s Relief Fund to help Covid-19 patients.

Bank’s Executive Director A Manimekhalai, handed over the cheque to Karnataka Chief Minister B S Yediyurappa and oxygen concentrators were donated under the bank’s CSR Activities, said a bank release.

K A Sindhu, General Manager, P C Wing, HO, A Ramalingam, DGM, FI Wing, HO, B Parswanath, DGM, Circle Office, Bengaluru accompanied the Executive Director.

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