What’s behind over 12% rally in Bandhan Bank share price today? Details here

Bandhan Bank Share Price Today: Shares of Bandhan Bank surged 12.38% on Friday to ₹211 apiece, a level not seen since 27 September, after the Reserve Bank of India (RBI) cleared the appointment of Partha Pratim Sengupta as managing director (MD) and chief executive officer (CEO) of the bank for a period of three years. 

The board had been seeking a new MD and CEO since Chandra Sekhar Ghosh stepped down on 9 July. Currently, Ratan Kesh, one of the executive directors, is serving as the interim MD and CEO.

"The RBI, vide its letter dated October 8, 2024, has granted its prior approval for the appointment of Partha Pratim Sengupta as MD and CEO of the bank, for a period of three years with effect from the date of taking charge," the company said in a regulatory filing.

“The bank has received the acceptance of Sengupta on October 9, 2024, and subsequent confirmation on October 10, 2024, that he will step down from his other engagements in compliance with the terms and conditions of the prior approval for the proposed appointment as MD and CEO of the bank,” Bandhan Bank added.

Between 2016 and 2018, Sengupta served as chief general manager, SBI Kolkata Circle, which included the states of West Bengal and Sikkim and also the Union territory of Andaman and Nicobar Islands.

In 2020, Sengupta was selected as MD and CEO of Indian Overseas Bank and led the bank until December 2022.

Other updates

Bandhan Bank stated in a separate filing that the National Credit Guarantee Trustee Company had completed an audit of loan claims filed by the lender under a guarantee scheme and said the remaining claims payout to the bank stood at ₹314 crore.

The audit by the government agency was related to a set of loans the bank had given out as part of a government-backed scheme during the covid-19 pandemic. The scheme was meant to ensure payments to lenders in the case of defaults on microloans by small borrowers.

Analysts Take

Jefferies views the appointment of Partha Sengupta as a significant positive for Bandhan Bank given his extensive banking sector experience, particularly his previous roles as deputy MD and chief credit officer at SBI and MD and CEO of Indian Overseas Bank.

It notes that Sengupta's experience, particularly in West Bengal—an important market for Bandhan Bank—bodes well for the bank's future prospects.

Goldman Sachs believes the appointment of the new MD and CEO along with the resolution of the CGFMU claim alleviates near-term concerns for the bank. Similarly, CLSA emphasises that with key overhangs now resolved, the focus will shift back to Bandhan Bank's fundamentals.

Axis Capital said: “Sengupta’s experience during his tenure at SBI Kolkata circle will prove beneficial for Bandhan. However, we need to get visibility of future strategy for the bank and further changes in senior leadership, if any.”

A tumultuous journey

Bandhan Bank had seen prolonged asset-quality issues leading to a sharp deterioration in its return on assets (RoA) and management exits over the past 2-3 years across business functions. Gross non-performing assets (GNPAs) rose to 4.23% at the end of June from 3.48% in the previous quarter. 

The central bank had also appointed a director on the bank's board to oversee the management transition after Ghosh stepped down.

Earlier this month, Icra downgraded the bank's long-term ratings, citing sustained weakness in the small business portfolio.

"Icra notes that the bank’s gross stress pool (SMA1 -1 & 2 in emerging entrepreneur business (EEB) portfolio and overall GNPAs has declined, though at a slower-than-anticipated pace and driven by significant write-offs in FY23 and FY24, leading to high credit costs," said the rating agency in its note on 1 October. 

“Despite the reduction in its net stress book, Bandhan’s asset quality remains monitorable, given the concerns of overleveraging,” the note added.

With the appointment of Sengupta, the RBI has once again chosen a former public sector banker to turn around an ailing private sector bank. Earlier, RBI had appointed Prashant Kumar, a former SBI official, as the CEO of Yes Bank at the time of reconstruction; R. Subramaniakumar, former CEO of Indian Overseas Bank, as the CEO of RBL Bank six months after the exit of its earlier CEO.

Similarly, it appointed Sanjeev Nautiyal, a former SBI official, as the CEO of Ujjivan Small Finance Bank; and Salee S. Nair, a former SBI official, as the CEO of Tamilnad Mercantile Bank.

On 23 August 2015, Bandhan Bank commenced operations with an initial network of 501 branches and 50 ATMs across 24 states, following the RBI's in-principle approval granted on 2 April 2014 to establish a universal bank. Notably, it is the first microfinance institution from the eastern region to transition into a universal bank.

The Sensex ended the day at 81,381.36, down 0.28%.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.