India's Bandhan Bank gears for $11.7b merger

The deal will create one of India’s largest rural and semi-urban lending platforms.

Bloomberg reports that India’s newest lender, Bandhan Bank Ltd., is combining with mortgage financier Gruh Finance in a $11.7b deal that aims to meet the central bank’s ownership guidelines.

Also read: Here's why the recovery of India's banks hinges on privatisation and mergers

Investors in Gruh Finance will get 568 shares of Bandhan Bank for every 1,000 they own, according to exchange filings from the companies.

The transaction is meant to help Bandhan Bank founder and CEO Chandra Shekhar Ghosh comply with the Reserve Bank of India’s (RBI) ownership rules and allow the micro lender to expand into a new category of loans.

“Diluting shareholding is just one benefit of this merger; the main purpose is to grow our business in the best way possible,” Ghosh said. “We have a strong presence in the east of the country, Gruh has a good network in the west. It is good for both of us.”

Also read: India eyes merger of 3 state banks to create country's third largest lender

The RBI slapped penalties on Bandhan Bank after it missed a deadline in September to bring Ghosh’s holding down to 40% in line with its ownership guidelines. The central bank also froze any further increase in salary and withdrew the bank’s right to open new branches without the need for prior approval.

“This merger will create one of the largest rural and semi-urban lending platforms in India,” said Deepak Parekh, chairman of Gruh’s parent HDFC.

Here’s more from Bloomberg:

Also Read

Bangkok Bank logs net profit of $1.05b for 9M 2024

Banks face value creation challenge despite record revenues

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit