CCI approves Bandhan Bank merger with GRUH Finance

Regulatory body Competition Commission of India (CCI) approved the merger of Kolkata-based Bandhan Bank with affordable housing finance company GRUH Finance.

On January 7, 2019, board of directors of both the companies had approved the merger and said that it would be completed within six months.

The merger comes after the Reserve Bank of India (RBI) imposed penalties on Bandhan Bank, including a freeze of remuneration of its Managing Director and CEO Chandrasekhar Ghosh, as well as on branch expansion, as it had failed to dilute promoter shareholding to the mandated level of 40 per cent.

Post the merger, the shareholding of Bandhan Financial Holdings in Bandhan Bank would reduce to 61% from 82.3%.

Mumbai-headquartered banking and financial services firm HDFC Ltd holds 57.83 per cent stake in Gruh Finance, which will come down to about 15 per cent after the merger.

Bandhan Bank had on January said that the merger will help diversify its loan book. Currently, 85% of Bandhan Bank’s Rs 33,373-crore loan book is in the form of micro loans. To this, the bank will add Rs 16,663 crore in housing loans. After the merger, the share of micro loans in the combined loan book will reduce to 58%.

Last month, the RBI said that it has no objection for the voluntary amalgamation of GRUH Finance Ltd into Bandhan Bank.

GRUH Finance is the affordable housing finance arm of HDFC Ltd. It commenced its operations from Ahmedabad in January 1988. GRUH Finance has a retail network of 195 branches spread across 11 states in India.

Established in 2001, the Kolkata-headquartered Bandhan Bank today has more than 3,992 banking outlets spreading across 34 out of the 36 states and Union territories in India.