Bandhan Bank’s shares recuperated from Monday’s losses after the bank clarified that the ongoing audit of its books is not initiated by the Reserve Bank of India (RBI).
The audit stems from the government of India’s commitment to compensate lenders for losses incurred during the financial year ending March 2021 due to emergency loans granted amid the pandemic. Bandhan Bank, based in Kolkata, reported losses of ₹2,600 crore for loans issued under the Emergency Credit Line Guarantee Scheme (ECLGS), with ₹917 crore already received.
The bank sought an additional ₹1,290 crore as a second tranche of compensation, prompting an audit since the amount exceeds ₹1,000 crore. Initially, concerns arose that the audit, including a forensic examination by the RBI, indicated suspicion of foul play, causing an 8% dip in the stock on January 8.
However, on January 9, the bank clarified that the audit would be conducted by the Credit Guarantee Fund of Micro Units (CGFMU), easing fears in the market. This clarification prompted a more than 1.5 percent jump in Bandhan Bank shares, with investors relieved that the RBI is not involved in the audit. The bank stated, “The Bank has clarified this information out of an abundant cautious approach and in line with the governance practices being followed by the Bank.”
