The Reserve Bank of India (RBI) approved Partha Pratim Sengupta’s appointment as Managing Director and Chief Executive Officer (MD & CEO) for a three-year term, effective November 10, 2024, and the private sector lender’s share price saw a nine per cent increase to Rs 204.90 on the BSE in intraday trading on Friday.
In April of this year, MD and CEO Chandra Shekhar Ghosh, the creator of Bandhan Bank, announced his unexpected retirement. One of the executive directors, Ratan Kumar Kesh, was named CEO in the interim.
Sengupta’s nomination, according to analysts at JM Financial Institutional Securities, clears up Bandhan Bank’s leadership situation and eliminates a significant cloud.
Bandhan Bank, whose credit performance has been difficult over the past few years, should benefit from Sengupta’s credit experience gained in both corporate and retail banking, the statement added.
In contrast, the share price of Bandhan Bank has underperformed the market thus far in 2024, declining 17% while the BSE Sensex has increased by 13%. On January 4, 2024, the stock reached its 52-week high of Rs 263.15.
With its main office located in Kolkata, Bandhan Bank conducts microfinance using the group-based individual lending approach. As of June 30, 2024, there were 6,297 branches, banking units, doorstep service centres (DSCs), and GRUH centres operated by Bandhan Bank, which were dispersed in 35 states and Union Territories (UTs).
The rating agency ICRA reduced Bandhan Bank’s long-term ratings on October 1, 2024. According to the statement, the downgrade was caused by the emerging entrepreneur business (EEB) portfolio’s ongoing difficulties, which are expected to persist given the industry’s worries over borrower-level overleveraging.
ICRA continued: “The rating also takes into consideration the recent departures of senior management from the bank and the RBI’s appointment of a nominee director to oversee the management transition on the board in June 2024, even though the senior management team has been strengthened concurrently.”
Moderation has also been observed in Bandhan’s net stress book. However, according to ICRA, the adequacy of the provisions on the same will rely on whether the National Credit Guarantee Trustee Company Ltd (NCGTC) completes its ongoing audit and whether claims against these stressed loans are received under different government schemes.
