According to RBI regulations, NOFHC is allowed to pursue non-banking financial services business three years after commencing business. According to the regulations Banks promoted by groups having 40 per cent or more assets/income from non-financial business will require RBI’s prior approval for raising paid-up voting equity capital beyond 10 billion for every block of 5 billion which was not fulfilled by Bandhan Bank and hence RBI stopped Bandhan bank from opening new branches. The central bank has also ordered suspension of Bandhan Bank CEO Chandra Shekhar Ghosh’s salary over decline to stick to shareholding rules. The promoter holding in Bandhan Bank is currently at around 82.28 per cent.

“We have given a long rope in the past, but we are cutting the slack. And the Banking Regulation Act enables RBI to take action not only against banks but also against bank officials; Compliance is not just for compliance team. It starts right from the CEO, from business verticals,” said RBI executive director Sudarshan Sen who had cautioned earlier that there is a greater need for compliance with rules and regulations

“Current branch count, in fact, is adequate to take care of growth for the next 2 to 3 years,” Said Bandhan Bank .On limitations on branch expansion, Bandhan Bank clarified that it did not expect challenges to its regular pace of growth. It has 937 branches as of June-end and had plans to open 1,000 branches by FY19-end.

Axis Capital said, “We feel RBI restricting Bandhan Bank will have an unfavorable presence on Kotak Bank too wherein the promoter shareholding needs to be bought down to 20% which is 30% currently. The regulator seems to be in no mood to give any relaxation to any bank and may take disciplinary actions too.” As per RBI permission, Uday Kotak has to trim down its promoter stake in KMB to less than 20 percent from existing 30 percent. As per the mandate, it has to lessen promoter stake to 20 percent of paid-up capital by December 31, 2018, and 15 percent by March 31, 2020