The Reserve Bank of India (RBI) has appointed Arun Kumar Singh, a chief general manager at the RBI, as an additional director to the board of Bandhan Bank. This decision, effective from June 24, 2024, is for a period of one year and is in line with the RBI’s authority under the Banking Regulation Act to ensure proper oversight of bank operations.
Arun Kumar Singh brings with him 36 years of experience at the RBI, having held key roles in Non-Banking Supervision & Regulation, Financial Inclusion, and Monetary Policy. Bandhan Bank confirmed Singh’s appointment in a notification, but neither the RBI nor the bank provided specific reasons for this move. However, sources cited by Media indicate that the decision was driven by Bandhan Bank’s recent poor financial performance and significant profit decline.
In the quarter ending March 31, 2024, Bandhan Bank reported a staggering 93 percent drop in profits, primarily due to write-offs of bad loans and provisions for potential non-performing loans. Additionally, the bank has been under scrutiny since January for loans disbursed during the COVID-19 pandemic, which are currently being investigated by the National Credit Guarantee Trustee Company, a government agency focused on small business loan defaults.
This leadership change comes as Chandra Shekhar Ghosh, the Managing Director and CEO of Bandhan Bank, is set to retire on July 9, 2024, after a decade in his role. The RBI has yet to approve a new CEO to succeed Ghosh.
Market reactions were swift, with Bandhan Bank’s shares initially falling by 4.4 percent in early trading on Tuesday. However, the stock managed to reduce its losses to 1.4 percent later in the day, as reported by various media outlets. Macquarie analyst Suresh Ganapathy commented that while the bank’s stock might see short-term pressure, the RBI’s intervention should be viewed as a prudent measure to stabilize the bank’s management and operations.
