With today’s fall, Bandhan Bank
has tanked 27 per cent thus far in the calendar year 2020. In comparison, the S&P BSE Sensex was down 5 per cent during the same period.
The RBI had lifted the “regulatory restriction” on opening of branches by Bandhan Bank, provided the bank ensured at least a quarter of all banking outlets opened by it during a financial year were in unbanked rural centres, Bandhan Bank
informed stock exchanges on Tuesday.
However, analysts have fundamental concerns on over-leverage in core markets
of eastern India; inability to meaningfully diversify away from microfinance and concentration risk.
Bandhan Bank reported strong profitability, robust capitalisation, healthy resource profile supported by demonstrated ability to build up a retail deposit franchise and healthy reported asset quality over the past four years.
However, these strengths are partially offset by geographic concentration in operations and exposure to local socio-political risks inherent in the micro loan business, modest credit profile of borrowers and potential risk of regulatory strictures linked to non-dilution of promoter holding, rating agency Crisil said.
The bank's significant presence in East and North-East India regions exposes it to geographical concentration risk, inherent to the segment, it said.
At 01:51 pm, Bandhan Bank had partially erased its losses and was trading 3 per cent lower at Rs 387 on the BSE. In comparison, the S&P BSE Sensex was down 2.7 per cent at 38,668 points. The counter has seen huge trading volumes with a combined 8.1 million shares changing hands on the NSE and BSE so far.