Bandhan Bank: RBI's rap on knuckles brings new worries for investors

Even if financials aren't destabilised in the near-term, the stock may remain under pressure until promoters firm up on stake reduction

Investors were in no mood to forgive the Bandhan Bank stock after Reserve Bank of India’s (RBI’s) diktat to freeze its MD & CEO’s remuneration. RBI’s action is a fallout of the bank’s promoter entity -- Non Operative Financial Holding Company (NOFHC), not reducing its stake from 82 per cent to 40 per cent in three years starting August 2015, as required by the universal banking norms.

Once the news came after Friday’s market closing, the stock faced with heavy selling and hit the lower circuit on Monday. This is despite the management’s attempt to pacify investors in Saturday’s conference call.

Experts